Cover and table of contents

156K characters. Original on sec.gov · Markdown

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, 2023


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

For the transition period from to

Commission file number 001-31978

Assurant, Inc.

(Exact name of registrant as specified in its charter)


Delaware												39-1126612
(State or other jurisdiction of incorporation)												(I.R.S. Employer Identification No.)

260 Interstate North Circle SE

Atlanta, Georgia 30339

(770) 763-1000

(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 27, 2023 was 52,590,620.

ASSURANT, INC.

QUARTERLY REPORT ON FORM 10-Q

FOR THE QUARTERLY PERIOD ENDED SEPTEMBER 30, 2023

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, 2023 and December 31, 2022	2

	Consolidated Statements of Operations (unaudited) for the three and nine months ended September 30, 2023 and 2022	3

	Consolidated Statements of Comprehensive Income (unaudited) for the three and nine months ended September 30, 2023 and 2022	4

	Consolidated Statements of Changes in Equity (unaudited) for the three and nine months ended September 30, 2023 and 2022	5

	Consolidated Statements of Cash Flows (unaudited) for the nine months ended September 30, 2023 and 2022	7

	Notes to Consolidated Financial Statements (unaudited)	9

2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	34

3.	Quantitative and Qualitative Disclosures About Market Risk	49

4.	Controls and Procedures	49

	PART II OTHER INFORMATION

1.	Legal Proceedings	50

1A.	Risk Factors	50

2.	Unregistered Sales of Equity Securities and Use of Proceeds	50

5.	Other Information	50

6.	Exhibits	51

	Signatures	52

Assurant, Inc.

Consolidated Balance Sheets (unaudited)


	September 30, 2023		December 31, 2022
	(in millions, except number of shares and per share amounts)
Assets
Investments:
Fixed maturity securities available for sale, at fair value (amortized cost - $7,262.5 and $6,920.8 at September 30, 2023 and December 31, 2022, respectively)	$	6,530.5	$	6,283.7
Equity securities at fair value	256.5		281.3
Commercial mortgage loans on real estate, at amortized cost (net of allowances for credit losses of $4.4 and $1.8 at September 30, 2023 and December 31, 2022, respectively)	322.0		295.6
Short-term investments	290.4		155.5
Other investments	523.3		508.4
Total investments	7,922.7		7,524.5
Cash and cash equivalents	1,425.3		1,536.7
Premiums and accounts receivable (net of allowances for credit losses of $7.5 and $9.2 at September 30, 2023 and December 31, 2022, respectively)	2,410.2		2,406.4
Reinsurance recoverables (net of allowances for credit losses of $4.8 and $5.4 at September 30, 2023 and December 31, 2022, respectively)	6,683.8		6,999.4
Accrued investment income	93.5		85.1
Deferred acquisition costs	9,903.8		9,677.1
Property and equipment, net	664.4		645.1
Goodwill	2,605.2		2,603.0
Value of business acquired	124.7		262.8
Other intangible assets, net	589.9		638.9
Other assets (net of allowances for credit losses of $0.9 and $1.7 at September 30, 2023 and December 31, 2022, respectively) (1)	785.3		738.3

Total assets	$	33,208.8	$	33,117.3
Liabilities
Future policy benefits and expenses	$	511.0	$	507.9
Unearned premiums	20,119.9		19,802.4
Claims and benefits payable	2,010.8		2,210.0
Commissions payable	602.0		647.5
Reinsurance balances payable	420.0		492.8
Funds held under reinsurance	403.0		366.6
Accounts payable and other liabilities (including allowances for credit losses of $9.4 and $10.3 at September 30, 2023 and December 31, 2022, respectively, for the unsecured portion of the high deductible recoverables)	2,571.5		2,731.5
Debt	2,080.0		2,129.9

Total liabilities	28,718.2		28,888.6
Commitments and contingencies (Note 15)
Stockholders’ equity
Common stock, par value $0.01 per share, 800,000,000 shares authorized, 55,034,013 and 55,126,470 shares issued and 52,737,924 and 52,830,381 shares outstanding at September 30, 2023 and December 31, 2022, respectively	0.6		0.6
Additional paid-in capital	1,673.1		1,637.8
Retained earnings	3,990.7		3,699.3
Accumulated other comprehensive loss	(1,051.0)		(986.2)
Treasury stock, at cost; 2,296,089 shares at September 30, 2023 and December 31, 2022	(122.8)		(122.8)
Total equity	4,490.6		4,228.7
Total liabilities and equity	$	33,208.8	$	33,117.3

(1)Other assets as of September 30, 2023 includes the assets of the Company’s Miami, Florida property which were reclassified from property and equipment, net, when held-for-sale criteria was met in second quarter 2023. Refer to Note 4 for additional 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,
	2023		2022		2023		2022
	(in millions, except number of shares and per share amounts)
Revenues
Net earned premiums	$	2,357.3	$	2,197.1	$	6,965.8	$	6,502.4
Fees and other income	310.4		294.6		888.8		942.2
Net investment income	125.5		83.5		343.6		261.8
Net realized losses on investments (including $0.8, $0.0, $6.4, and $2.1 of impairment-related losses for the three and nine months ended September 30, 2023 and 2022, respectively) and fair value changes to equity securities	(19.1)		(27.4)		(49.7)		(166.2)
Total revenues	2,774.1		2,547.8		8,148.5		7,540.2
Benefits, losses and expenses
Policyholder benefits	644.6		670.5		1,922.7		1,760.5
Underwriting, selling, general and administrative expenses	1,873.7		1,842.5		5,564.5		5,444.8

Interest expense	27.0		26.3		81.2		80.4
(Gain) loss on extinguishment of debt	—		—		(0.1)		0.9
Total benefits, losses and expenses	2,545.3		2,539.3		7,568.3		7,286.6
Income before income tax expense	228.8		8.5		580.2		253.6
Income tax expense	38.7		1.2		120.2		45.1
Net income	$	190.1	$	7.3	$	460.0	$	208.5







Earnings Per Common Share

Basic	$	3.55	$	0.14	$	8.58	$	3.81



Diluted	$	3.54	$	0.14	$	8.55	$	3.78



Share Data
Weighted average common shares outstanding used in basic per common share calculations	53,535,982		53,717,373		53,591,495		54,693,799
Plus: Dilutive securities	209,191		349,232		232,889		431,051
Weighted average common shares outstanding used in diluted per common share calculations	53,745,173		54,066,605		53,824,384		55,124,850

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,
	2023		2022		2023		2022
	(in millions)
Net income	$	190.1	$	7.3	$	460.0	$	208.5
Other comprehensive income (loss):
Change in unrealized losses on securities, net of taxes of $30.2, $50.5, $19.1 and $213.3 for the three and nine months ended September 30, 2023 and 2022, respectively	(112.9)		(209.3)		(80.6)		(836.0)
Change in unrealized gains on derivative transactions, net of taxes of $0.3, $0.1, $(0.3) and $0.5 for the three and nine months ended September 30, 2023 and 2022, respectively	(1.2)		(0.6)		1.0		(1.9)
Change in foreign currency translation, net of taxes of $0.4, $0.1, $(1.7) and $(2.5) for the three and nine months ended September 30, 2023 and 2022, respectively	(11.3)		(51.4)		22.4		(92.0)
Change in pension and postretirement unrecognized net periodic benefit cost, net of taxes of $0.7, $0.4, $2.0 and $1.3 for the three and nine months ended September 30, 2023 and 2022, respectively	(2.9)		(1.4)		(7.6)		(5.0)
Total other comprehensive loss	(128.3)		(262.7)		(64.8)		(934.9)
Total comprehensive income (loss)	$	61.8	$	(255.4)	$	395.2	$	(726.4)

See the accompanying Notes to Consolidated Financial Statements (unaudited)

Assurant, Inc.

Consolidated Statements of Changes in Equity (unaudited)


	Three Months Ended September 30, 2023
		Common Stock		Additional Paid-in Capital		Retained Earnings		Accumulated Other Comprehensive Loss		Treasury Stock		Total
	(in millions)
Balance at June 30, 2023		$	0.6	$	1,653.7	$	3,877.2	$	(922.7)	$	(122.8)	$	4,486.0

Stock plan exercises		—		7.5		—		—		—		7.5
Stock plan compensation expense		—		23.9		—		—		—		23.9
Common stock dividends ($0.70 per share)		—		—		(37.1)		—		—		(37.1)
Acquisition of common stock		—		(12.0)		(39.5)		—		—		(51.5)

Net income		—		—		190.1		—		—		190.1





Other comprehensive loss		—		—		—		(128.3)		—		(128.3)
Balance at September 30, 2023		$	0.6	$	1,673.1	$	3,990.7	$	(1,051.0)	$	(122.8)	$	4,490.6


	Three Months Ended September 30, 2022
		Common Stock		Additional Paid-in Capital		Retained Earnings		Accumulated Other Comprehensive Loss		Treasury Stock		Total
	(in millions)
Balance at June 30, 2022		$	0.6	$	1,629.9	$	3,774.2	$	(822.2)	$	(122.8)	$	4,459.7

Stock plan exercises		—		5.8		—		—		—		5.8
Stock plan compensation expense		—		17.9		—		—		—		17.9
Common stock dividends ($0.68 per share)		—		—		(36.7)		—		—		(36.7)
Acquisition of common stock		—		(26.5)		(65.9)		—		—		(92.4)

Net income		—		—		7.3		—		—		7.3





Other comprehensive loss		—		—		—		(262.7)		—		(262.7)
Balance at September 30, 2022		$	0.6	$	1,627.1	$	3,678.9	$	(1,084.9)	$	(122.8)	$	4,098.9


	Nine Months Ended September 30, 2023
		Common Stock		Additional Paid-in Capital		Retained Earnings		Accumulated Other Comprehensive Loss		Treasury Stock		Total
	(in millions)
Balance at December 31, 2022		$	0.6	$	1,637.8	$	3,699.3	$	(986.2)	$	(122.8)	$	4,228.7

Stock plan exercises		—		14.9		—		—		—		14.9
Stock plan compensation expense		—		53.6		—		—		—		53.6
Common stock dividends ($2.10 per share)		—		—		(113.8)		—		—		(113.8)
Acquisition of common stock		—		(33.2)		(54.8)		—		—		(88.0)

Net income		—		—		460.0		—		—		460.0





Other comprehensive loss		—		—		—		(64.8)		—		(64.8)
Balance at September 30, 2023		$	0.6	$	1,673.1	$	3,990.7	$	(1,051.0)	$	(122.8)	$	4,490.6

Assurant, Inc.

Consolidated Statements of Changes in Equity (unaudited)


	Nine Months Ended September 30, 2022
		Common Stock		Additional Paid-in Capital		Retained Earnings		Accumulated Other Comprehensive Loss		Treasury Stock		Total
	(in millions)
Balance at December 31, 2021		$	0.7	$	1,695.0	$	4,041.2	$	(150.0)	$	(122.8)	$	5,464.1

Stock plan exercises		—		13.6		—		—		—		13.6
Stock plan compensation expense		—		47.2		—		—		—		47.2
Common stock dividends ($2.04 per share)		—		—		(112.7)		—		—		(112.7)
Acquisition of common stock		(0.1)		(128.7)		(458.1)		—		—		(586.9)

Net income		—		—		208.5		—		—		208.5





Other comprehensive loss		—		—		—		(934.9)		—		(934.9)
Balance at September 30, 2022		$	0.6	$	1,627.1	$	3,678.9	$	(1,084.9)	$	(122.8)	$	4,098.9

See the accompanying Notes to Consolidated Financial Statements (unaudited)

Assurant, Inc.

Consolidated Statements of Cash Flows (unaudited)


	Nine Months Ended September 30,
	2023		2022
	(in millions)
Operating activities
Net income	$	460.0	$	208.5
Adjustments to reconcile net income to net cash provided by operating activities:
Noncash revenues, expenses, gains and losses included in net income from operations:

Deferred tax (benefit) expense	(69.1)		65.6
Depreciation and amortization	141.2		140.2
Net realized losses on investments, including impairment losses	49.7		166.2
(Gain) loss on extinguishment of debt	(0.1)		0.9

Stock based compensation expense	53.6		47.2


Restructuring costs	18.3		—
Changes in operating assets and liabilities:
Insurance policy reserves and expenses	66.9		2,388.4
Premiums and accounts receivable	10.4		(384.2)
Commissions payable	(39.3)		(9.4)
Reinsurance recoverable	330.8		(1,397.2)
Reinsurance balance payable	(77.0)		71.8
Funds withheld under reinsurance	36.4		13.2
Deferred acquisition costs and value of business acquired	(68.4)		(514.1)
Taxes (receivable) payable	(45.4)		49.3
Other assets and other liabilities	(83.8)		(508.7)
Other	(8.7)		(17.9)

Net cash provided by operating activities	775.5		319.8
Investing activities
Sales of:
Fixed maturity securities available for sale	955.7		2,310.3
Equity securities	11.1		43.2
Other invested assets	30.0		123.9

Subsidiary, net of cash transferred	—		4.8
Maturities, calls, prepayments, and scheduled redemption of:
Fixed maturity securities available for sale	199.2		386.3
Commercial mortgage loans on real estate	15.4		29.1
Purchases of:
Fixed maturity securities available for sale	(1,495.6)		(2,681.9)
Equity securities	(3.4)		(27.0)
Commercial mortgage loans on real estate	(44.4)		(77.0)
Other invested assets	(37.0)		(91.1)
Property and equipment and other	(148.2)		(133.9)
Subsidiaries, net of cash transferred	(0.3)		—
Change in short-term investments	(124.0)		(22.1)
Other	0.7		0.5

Net cash used in investing activities	(640.8)		(134.9)
Financing activities
Issuance of debt, net of issuance costs	173.2		—

Assurant, Inc.

Consolidated Statements of Cash Flows (unaudited)


	Nine Months Ended September 30,
	2023		2022
Repayment of debt	(225.0)		(75.9)
Payment of contingent liability	(2.5)		—


Acquisition of common stock	(67.1)		(557.6)
Common stock dividends paid	(113.8)		(112.7)

Employee stock purchases and withholdings	(6.7)		(21.0)


Net cash used in financing activities	(241.9)		(767.2)
Effect of exchange rate changes on cash and cash equivalents	(4.2)		(42.7)


Change in cash and cash equivalents	(111.4)		(625.0)
Cash and cash equivalents at beginning of period	1,536.7		2,054.8





Cash and cash equivalents at end of period	$	1,425.3	$	1,429.8

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)

INDEX OF NOTES


Note Number		Page Number
1.	Nature of Operations	9
2.	Basis of Presentation	9
3.	Recent Accounting Pronouncements	10
4.	Segment Information	12
5.	Contract Revenues	14
6.	Investments	16
7.	Fair Value Disclosures	20
8.	Deferred Acquisition Costs	23
9.	Reserves	24
10.	Debt	28
11.	Accumulated Other Comprehensive Income	28
12.	Earnings Per Common Share	30
13.	Retirement and Other Employee Benefits	31
14.	Restructuring and Related Impairment Charges	32
15.	Commitments and Contingencies	33

1. Nature of Operations

Assurant, Inc. (the “Company”) is a leading global business services company that supports, protects and connects major consumer purchases. The Company supports the advancement of the connected world by partnering with the world’s leading brands to develop innovative solutions and to deliver an 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, extended service products and related services for consumer electronics and appliances, and credit and other insurance products (referred to as “Connected Living”); and vehicle protection, leased and financed solutions and other related services (referred to as “Global Automotive”). Through its Global Housing segment, the Company provides lender-placed and voluntary homeowners insurance and manufactured housing insurance, and lender-placed flood insurance (referred to as “Homeowners”); and renters insurance and related and other products (referred to as “Renters and Other”).

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 consolidated balance sheet as of September 30, 2023, the consolidated statements of operations, consolidated statements of comprehensive income and consolidated statements of changes in equity for the three and nine months ended September 30, 2023 and 2022 and the consolidated statements of cash flows for the nine months ended September 30, 2023 and 2022 are 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 revised to conform to the current period presentation, including the changes to the composition of the reportable segments described in Note 4 and changes in future policy benefits and expenses and reinsurance recoverables from the modified retrospective application of the accounting pronouncement, targeted improvements to long duration contracts, as described in Notes 3 and 9.

Assurant, Inc.

Notes to Consolidated Financial Statements (unaudited)

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

Operating results for the three and nine months ended September 30, 2023 are not necessarily indicative of the results that may be expected for the year ending December 31, 2023. 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, 2022.

Restricted Cash

Restricted cash and cash equivalents of $72.6 million and $28.7 million as of September 30, 2023 and December 31, 2022, respectively, principally related to cash deposits involving insurance programs with restrictions as to withdrawal and use, are classified within cash and cash equivalents in the consolidated balance sheets.

3. Recent Accounting Pronouncements

Changes to GAAP are established by the Financial Accounting Standards Board (“FASB”) in the form of Accounting Standards Updates (“ASUs”) to the FASB Accounting Standards Codification. The Company considers the applicability and impact of all ASUs. The following table provides a description of ASUs recently issued by the FASB and the impact of their adoption on the Company’s consolidated financial statements.

Adopted

The table below describes the impacts of the ASUs adopted by the Company, effective January 1, 2023:

Assurant, Inc.

Notes to Consolidated Financial Statements (unaudited)

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


Standard			Summary of the Standard			Effective date Method of Adoption			Impact of the Standard on the Company’s Financial Statements
ASU 2018-12, Financial Services—Insurance (Topic 944): Targeted Improvements to the Accounting for Long-Duration Contracts, as amended by ASU 2019-09, Financial Services—Insurance (Topic 944): Effective Date, as amended by ASU 2020-11, Financial Services—Insurance (Topic 944): Effective Date and Early Application and as amended by ASU 2022-05, Financial services—Insurance (Topic 944): Transition for Sold Contracts			The guidance includes the following primary changes: assumptions supporting liabilities for future policy benefits and expenses 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 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 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. In December 2022, the FASB issued guidance to provide entities an accounting policy election to not apply the accounting guidance to contracts or legal entities sold and derecognized before the effective date when the entity has no significant continuing involvement with them. The election may be applied on a transaction-by-transaction basis.			January 1, 2023, to be applied retrospectively or modified retrospectively to January 1, 2021 (with early adoption permitted)			The Company adopted this standard as of January 1, 2023 using the modified retrospective method on liabilities for future policy benefits and expenses to January 1, 2021 for long-term care insurance contracts that have been fully reinsured. The Company also adopted the amended guidance in ASU 2022-05 and elected to not apply the amended accounting guidance to long duration contracts of legal entities sold and derecognized before the January 1, 2023 effective date as the Company has no significant continuing involvement with them. The adoption of this standard along with the amended guidance on transition has no impact on equity or net income on the long-term care contracts as they are fully reinsured with third party reinsurers. However, disclosure along with a roll-forward table on a gross basis on the long-term care business is presented in Note 9.

Assurant, Inc.

Notes to Consolidated Financial Statements (unaudited)

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


ASU 2021-08, Business Combinations (Topic 805): Accounting for Contract Assets and Contract Liabilities from Contracts with Customers			The guidance improves 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 acquired 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.			January 1, 2023, to be applied prospectively (with early adoption permitted).			The Company adopted this standard from January 1, 2023. The amendments will be applied to business combinations occurring on or after the effective date of the amendments.

Not Yet Adopted

As of September 30, 2023, ASUs not yet adopted were assessed and either determined to be not applicable or are not expected to have a material impact on the Company’s consolidated financial statements or disclosures.

4. Segment Information

As of September 30, 2023, the Company had two reportable operating segments, Global Lifestyle and Global Housing. In addition, we report the Corporate and Other segment, which includes corporate employee-related expenses and activities of the holding company. The Company defines Adjusted EBITDA, the segment measure of profitability, as net income, excluding net realized gains (losses) on investments and fair value changes to equity securities, non-core operations (defined below), restructuring costs related to strategic exit activities (outside of normal periodic restructuring and cost management activities), Assurant Health runoff operations (described below), interest expense, provision (benefit) for income taxes, depreciation expense, amortization of purchased intangible assets, as well as other highly variable or unusual items.

Effective January 1, 2023, the Company realigned the composition of its reportable operating segments to correspond with changes to its operating structure. As a result, the Global Housing segment is now comprised of two key lines of business: Homeowners, and Renters and Other. Certain specialty products, mainly the leased and financed business, previously reported in the Global Housing segment are now reported in Global Lifestyle to better align with the Company’s go-to-market strategy. This realignment had no impact on the Company’s consolidated results.

The following table presents segment Adjusted EBITDA with a reconciliation to net income:

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,
	2023		2022		2023		2022
Adjusted EBITDA by segment:
Global Lifestyle	$	191.8	$	179.4	$	587.7	$	627.1
Global Housing	165.1		(38.5)		388.1		126.9
Corporate and Other	(26.2)		(24.9)		(79.1)		(72.0)
Reconciling items to consolidated net income:
Interest expense	(27.0)		(26.3)		(81.2)		(80.4)
Depreciation expense	(25.8)		(22.6)		(77.6)		(64.7)
Amortization of purchased intangible assets	(18.2)		(17.3)		(55.6)		(51.9)
Net realized losses on investments and fair value changes to equity securities	(19.1)		(27.4)		(49.7)		(166.2)
Non-core operations (1)	3.0		(2.9)		(39.4)		(45.1)
Restructuring costs	(13.2)		—		(18.3)		(0.2)
Assurant Health runoff operations (2)	(0.3)		(0.1)		7.2		(0.6)
Other adjustments	(1.3)		(10.9)		(1.9)		(19.3)

Total reconciling items	(101.9)		(107.5)		(316.5)		(428.4)
Income before income tax expense	228.8		8.5		580.2		253.6
Income tax expense	38.7		1.2		120.2		45.1
Net income	$	190.1	$	7.3	$	460.0	$	208.5

(1)Consists of certain businesses which the Company has fully exited or expects to fully exit, including the long-tail commercial liability businesses (sharing economy and small commercial businesses), as well as certain legacy long-duration insurance policies (collectively referred to as “non-core operations”). The non-core operations do not qualify as held for sale or discontinued operations under GAAP accounting guidance and are presented as a reconciling item to consolidated net income.

(2)In first quarter 2023, the Company recorded income of $7.5 million related to a payment it received from Time Insurance Company (“TIC”) pursuant to a participation agreement that the Company had with TIC in connection with its sale by the Company in 2018. The payment related to the Company’s prior participation in the risk adjustment program introduced by the Patient Protection and Affordable Care Act of 2010.

Assurant, Inc.

Notes to Consolidated Financial Statements (unaudited)

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

The Company’s net earned premiums, fees and other income by segment and product are as follows:


	Three Months Ended September 30,				Nine Months Ended September 30,
	2023		2022		2023		2022
Global Lifestyle:
Connected Living	$	1,082.9	$	1,053.1	$	3,188.7	$	3,200.7
Global Automotive	1,022.9		969.5		3,066.3		2,823.1
Total	$	2,105.8	$	2,022.6	$	6,255.0	$	6,023.8

Global Housing:
Homeowners	$	434.1	$	331.9	$	1,237.8	$	1,013.4
Renters and Other	121.1		119.9		359.3		362.1
Total	$	555.2	$	451.8	$	1,597.1	$	1,375.5

The following table presents total assets by segment:


	September 30, 2023		December 31, 2022
Global Lifestyle (1)	$	27,502.0	$	27,404.1
Global Housing (1)	4,414.5		4,382.6
Corporate and Other (2)	1,292.3		1,330.6
Segment assets	$	33,208.8	$	33,117.3

(1)Segment assets for Global Lifestyle and Global Housing do not include net unrealized gains (losses) on securities attributable to those segments, which are all included within Corporate and Other.

(2)Includes the assets for non-core operations of $364.5 million and $416.6 million as of September 30, 2023 and December 31, 2022, respectively. Corporate and Other also includes the Miami, Florida property with a carrying value of $46.0 million as of September 30, 2023, which met held-for-sale criteria and was included in other assets. The Company has ceased depreciation of these assets which are recorded at carrying value, which is less than the estimated fair value less estimated costs to sell. During third quarter 2023, the Company submitted an agreement to a potential acquiror, which is subject to review, approval, execution and other conditions. There can be no assurance that a definitive agreement will be executed or that any transaction will be approved or consummated.

5. 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 $277.6 million and $258.3 million for Global Lifestyle and $22.3 million and $19.8 million for Global Housing for the three months ended September 30, 2023 and 2022, respectively. The disaggregated revenues from service contracts included in fees and other income on the consolidated statement of operations are $779.5 million and $826.6 million for Global Lifestyle and $63.1 million and $63.0 million for Global Housing for the nine months ended September 30, 2023 and 2022, respectively.

Global Lifestyle

In the Global Lifestyle segment, revenues from service contracts and sales of products are primarily from the 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

Assurant, Inc.

Notes to Consolidated Financial Statements (unaudited)

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

support and claims handling, supply chain and service delivery, repair and logistics, and device 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 Global Housing segment, revenues from service contracts and sales of products are primarily from the Homeowners business. As part of the Homeowners 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 $311.5 million and $161.6 million, respectively, as of September 30, 2023, and $271.7 million and $171.1 million, respectively, as of December 31, 2022. 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, 2023 and 2022 that was included in unearned revenue as of December 31, 2022 and 2021 was $22.3 million and $20.0 million, respectively. Revenue from service contracts and sales of products recognized during the nine months ended September 30, 2023 and 2022 that was included in unearned revenue as of December 31, 2022 and 2021 was $64.8 million and $69.0 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, 2023 and December 31, 2022, the Company had approximately $51.7 million and $61.4 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)

6. 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, 2023
	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	$	74.2	$	—	$	0.1	$	(6.5)	$	67.8
States, municipalities and political subdivisions	159.1		—		0.2		(17.6)		141.7
Foreign governments	460.9		—		1.6		(25.0)		437.5
Asset-backed	876.9		—		3.9		(27.7)		853.1
Commercial mortgage-backed	400.7		—		0.2		(64.1)		336.8
Residential mortgage-backed	531.0		—		0.3		(74.6)		456.7
U.S. corporate	3,293.9		—		7.1		(373.5)		2,927.5
Foreign corporate	1,465.8		—		2.7		(159.1)		1,309.4
Total fixed maturity securities	$	7,262.5	$	—	$	16.1	$	(748.1)	$	6,530.5


	December 31, 2022
	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	$	92.9	$	—	$	0.2	$	(6.7)	$	86.4
States, municipalities and political subdivisions	152.4		—		1.1		(16.0)		137.5
Foreign governments	416.2		—		0.6		(20.5)		396.3
Asset-backed	735.1		—		1.4		(40.2)		696.3
Commercial mortgage-backed	458.6		—		0.2		(56.5)		402.3
Residential mortgage-backed	492.7		—		0.4		(55.1)		438.0
U.S. corporate	3,265.1		—		13.9		(317.9)		2,961.1
Foreign corporate	1,307.8		—		3.4		(145.4)		1,165.8
Total fixed maturity securities	$	6,920.8	$	—	$	21.2	$	(658.3)	$	6,283.7

The cost or amortized cost and fair value of fixed maturity securities as of September 30, 2023 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.

Assurant, Inc.

Notes to Consolidated Financial Statements (unaudited)

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


	Cost or Amortized Cost		Fair Value
Due in one year or less	$	171.3	$	169.4
Due after one year through five years	1,586.8		1,499.0
Due after five years through ten years	2,662.1		2,388.4
Due after ten years	1,033.7		827.1
Total	5,453.9		4,883.9
Asset-backed	876.9		853.1
Commercial mortgage-backed	400.7		336.8
Residential mortgage-backed	531.0		456.7
Total	$	7,262.5	$	6,530.5

The following table sets forth the net realized gains (losses) on investments and fair value changes to equity securities, including impairments, recognized in the consolidated statements of operations for the periods indicated:


	Three Months Ended September 30,				Nine Months Ended September 30,
	2023		2022		2023		2022
Net realized (losses) gains on investments related to sales and other and fair value changes to equity securities:
Fixed maturity securities	$	(14.1)	$	(21.9)	$	(25.9)	$	(63.0)
Equity securities (1)	(3.0)		(5.2)		(15.9)		(102.4)
Commercial mortgage loans on real estate	(1.3)		(0.2)		(2.6)		—
Other investments	0.1		(0.1)		1.1		1.3
Total net realized losses on investments related to sales and other and fair value changes to equity securities	(18.3)		(27.4)		(43.3)		(164.1)
Net realized losses related to impairments:
Fixed maturity securities	(0.8)		—		(2.9)		(1.6)
Other investments	—		—		(3.5)		(0.5)
Total net realized losses related to impairments	(0.8)		—		(6.4)		(2.1)
Total net realized losses on investments and fair value changes to equity securities	$	(19.1)	$	(27.4)	$	(49.7)	$	(166.2)

(1)Upward adjustments of $0.2 million, $0.6 million, $0.0 million and $19.5 million for the three and nine months ended September 30, 2023 and 2022 and impairment of $3.5 million for the nine months ended September 30, 2023 were realized on equity investments accounted for under the measurement alternative.

The following table sets forth the portion of fair value changes to equity securities held for the periods indicated:


	Three Months Ended September 30,				Nine Months Ended September 30,
	2023		2022		2023		2022
Net losses recognized on equity securities	$	(3.0)	$	(5.2)	$	(15.9)	$	(102.4)
Less: Net realized gains (losses) related to sales of equity securities	0.1		(0.2)		(2.2)		20.0
Total fair value changes to equity securities held (1)	$	(3.1)	$	(5.0)	$	(13.7)	$	(122.4)

(1)Three and nine months ended September 30, 2023 and 2022 included $1.7 million, $6.2 million, $0.6 million and $78.5 million of net losses from four equity positions that went public during 2021. The total fair value of these investments as of September 30, 2023 was $3.4 million, included in equity securities on the consolidated balance sheet.

Equity investments accounted for under the measurement alternative are included within other investments on the consolidated balance sheets. The following table summarizes information related to these investments:

Assurant, Inc.

Notes to Consolidated Financial Statements (unaudited)

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


	September 30, 2023		December 31, 2022
Initial cost	$	83.0	$	81.7
Cumulative upward adjustments	51.4		50.8
Cumulative downward adjustments (including impairments)	(8.4)		(5.0)
Carrying value	$	126.0	$	127.5

The investment category and duration of the Company’s gross unrealized losses on fixed maturity securities as of September 30, 2023 and December 31, 2022 were as follows:


	September 30, 2023
	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	$	18.5	$	(0.6)	$	47.1	$	(5.9)	$	65.6	$	(6.5)
States, municipalities and political subdivisions	31.7		(1.0)		96.5		(16.6)		128.2		(17.6)
Foreign governments	132.0		(4.7)		200.5		(20.3)		332.5		(25.0)
Asset-backed	147.4		(6.6)		429.6		(21.1)		577.0		(27.7)
Commercial mortgage-backed	71.1		(9.6)		259.9		(54.5)		331.0		(64.1)
Residential mortgage-backed	161.2		(10.3)		287.6		(64.3)		448.8		(74.6)
U.S. corporate	973.6		(52.2)		1,782.0		(321.3)		2,755.6		(373.5)
Foreign corporate	439.4		(18.2)		807.3		(140.9)		1,246.7		(159.1)
Total fixed maturity securities	$	1,974.9	$	(103.2)	$	3,910.5	$	(644.9)	$	5,885.4	$	(748.1)


	December 31, 2022
	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	$	58.5	$	(2.9)	$	24.6	$	(3.8)	$	83.1	$	(6.7)
States, municipalities and political subdivisions	77.4		(7.8)		34.5		(8.2)		111.9		(16.0)
Foreign governments	268.5		(12.1)		92.7		(8.4)		361.2		(20.5)
Asset-backed	378.2		(22.0)		218.5		(18.2)		596.7		(40.2)
Commercial mortgage-backed	290.7		(33.2)		109.3		(23.3)		400.0		(56.5)
Residential mortgage-backed	371.3		(31.7)		58.6		(23.4)		429.9		(55.1)
U.S. corporate	2,266.6		(206.3)		370.3		(111.6)		2,636.9		(317.9)
Foreign corporate	843.9		(79.0)		251.8		(66.4)		1,095.7		(145.4)
Total fixed maturity securities	$	4,555.1	$	(395.0)	$	1,160.3	$	(263.3)	$	5,715.4	$	(658.3)

Total gross unrealized losses represented approximately 13% and 12% of the aggregate fair value of the related securities as of September 30, 2023 and December 31, 2022, respectively. Approximately 14% and 60% of these gross unrealized losses had been in a continuous loss position for less than twelve months as of September 30, 2023 and December 31, 2022, respectively. The total gross unrealized losses are comprised of 3,971 and 3,826 individual securities as of September 30, 2023 and December 31, 2022, respectively. In accordance with its policy, the Company concluded that for these securities, the gross unrealized losses as of September 30, 2023 and December 31, 2022 were related to non-credit factors and therefore, did not

Assurant, Inc.

Notes to Consolidated Financial Statements (unaudited)

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

recognize credit-related losses during the three and nine months ended September 30, 2023. 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, 2023, approximately 37% of the outstanding principal balance of commercial mortgage loans was concentrated in the states of California, Texas and Maryland. 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 less than $0.1 million to $10.0 million as of September 30, 2023 and from $0.1 million to $9.7 million as of December 31, 2022.

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 annual net operating income to its annual 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, 2023 and December 31, 2022.


	September 30, 2023
	Origination Year
	2023		2022		2021		2020		2019		Prior		Total		% of Total
Loan to value ratios (1):
70% and less	$	39.1	$	47.7	$	42.9	$	—	$	—	$	69.2	$	198.9	61.0	%
71% to 80%	2.5		29.7		68.6		2.8		—		4.5		108.1		33.1	%
81% to 95%	—		—		17.6		—		—		1.8		19.4		5.9	%
Greater than 95%	—		—		—		—		—		—		—		—	%
Total	$	41.6	$	77.4	$	129.1	$	2.8	$	—	$	75.5	$	326.4	100.0	%


	September 30, 2023
	Origination Year
	2023		2022		2021		2020		2019		Prior		Total		% of Total
Debt-service coverage ratios (2):
Greater than 2.0	$	—	$	25.3	$	11.6	$	—	$	—	$	47.5	$	84.4	25.8	%
1.5 to 2.0	16.9		26.4		11.4		—		—		10.6		65.3		20.0	%
1.0 to 1.5	24.7		25.7		56.5		—		—		12.4		119.3		36.6	%
Less than 1.0	—		—		49.6		2.8		—		5.0		57.4		17.6	%
Total	$	41.6	$	77.4	$	129.1	$	2.8	$	—	$	75.5	$	326.4	100.0	%

Assurant, Inc.

Notes to Consolidated Financial Statements (unaudited)

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


	December 31, 2022
	Origination Year
	2022		2021		2020		2019		2018		Prior		Total		% of Total
Loan to value ratios (1):
70% and less	$	44.0	$	45.1	$	—	$	—	$	—	$	76.0	$	165.1	55.5	%
71% to 80%	32.7		75.7		2.7		—		4.6		—		115.7		38.9	%
81% to 95%	—		14.7		—		—		—		—		14.7		5.0	%
Greater than 95%	—		—		—		—		—		1.9		1.9		0.6	%
Total	$	76.7	$	135.5	$	2.7	$	—	$	4.6	$	77.9	$	297.4	100.0	%


	December 31, 2022
	Origination Year
	2022		2021		2020		2019		2018		Prior		Total		% of Total
Debt-service coverage ratios (2):
Greater than 2.0	$	24.2	$	11.7	$	—	$	—	$	—	$	50.8	$	86.7	29.2	%
1.5 to 2.0	26.8		11.6		—		—		4.6		6.6		49.6		16.7	%
1.0 to 1.5	25.7		63.0		—		—		—		13.7		102.4		34.4	%
Less than 1.0	—		49.2		2.7		—		—		6.8		58.7		19.7	%
Total	$	76.7	$	135.5	$	2.7	$	—	$	4.6	$	77.9	$	297.4	100.0	%

(1)Loan-to-value ratio derived from current principal amount of the loan 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 recently reported annual net operating income from property operators divided by annual debt service payments.

7. 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 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

Assurant, Inc.

Notes to Consolidated Financial Statements (unaudited)

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

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, 2023 and December 31, 2022. 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 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.


	September 30, 2023
	Total		Level 1			Level 2			Level 3
Financial Assets
Fixed maturity securities:
U.S. government and government agencies and authorities	$	67.8	$	—		$	67.8		$	—
States, municipalities and political subdivisions	141.7		—			141.7			—
Foreign governments	437.5		—			437.5			—
Asset-backed	853.1		—			770.4			82.7
Commercial mortgage-backed	336.8		—			336.8			—
Residential mortgage-backed	456.7		—			456.7			—
U.S. corporate	2,927.5		—			2,892.2			35.3
Foreign corporate	1,309.4		—			1,301.7			7.7
Equity securities:
Mutual funds	32.0		32.0			—			—
Common stocks	16.9		16.2			0.7			—
Non-redeemable preferred stocks	207.6		—			207.6			—
Short-term investments	241.4		169.1		(2)	72.3		(3)	—
Other investments	56.8		56.7		(1)	—			0.1		(4)
Cash equivalents	859.9		849.2		(2)	10.7		(3)	—

Other assets	3.1		—			3.1		(4)	—
Assets held in separate accounts	10.2		6.0		(1)	4.2		(3)	—
Total financial assets	$	7,958.4	$	1,129.2		$	6,703.4		$	125.8

Financial Liabilities
Other liabilities	$	56.7	$	56.7	(1)	$	—		$	—
Liabilities related to separate accounts	10.2		6.0		(1)	4.2		(3)	—
Total financial liabilities	$	66.9	$	62.7		$	4.2		$	—

Assurant, Inc.

Notes to Consolidated Financial Statements (unaudited)

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


	December 31, 2022
	Total		Level 1			Level 2			Level 3
Financial Assets
Fixed maturity securities:
U.S. government and government agencies and authorities	$	86.4	$	—		$	86.4		$	—
States, municipalities and political subdivisions	137.5		—			137.5			—
Foreign governments	396.3		—			396.3			—
Asset-backed	696.3		—			635.9			60.4
Commercial mortgage-backed	402.3		—			402.3			—
Residential mortgage-backed	438.0		—			438.0			—
U.S. corporate	2,961.1		—			2,932.3			28.8
Foreign corporate	1,165.8		—			1,158.4			7.4
Equity securities:
Mutual funds	32.7		32.7			—			—
Common stocks	23.9		23.2			0.7			—
Non-redeemable preferred stocks	224.7		—			224.7			—
Short-term investments	119.9		72.2		(2)	47.7		(3)	—
Other investments	60.3		60.1		(1)	—			0.2		(4)
Cash equivalents	789.1		647.3		(2)	141.8		(3)	—


Assets held in separate accounts	10.1		4.8		(1)	5.3		(3)	—
Total financial assets	$	7,544.4	$	840.3		$	6,607.3		$	96.8

Financial Liabilities
Other liabilities	$	75.3	$	60.1	(1)	$	0.2	(4)	$	15.0	(5)
Liabilities related to separate accounts	10.1		4.8		(1)	5.3		(3)	—
Total financial liabilities	$	85.4	$	64.9		$	5.5		$	15.0

(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.

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, 2023
			Fair Value
	Carrying Value		Total		Level 1		Level 2		Level 3
Financial Assets
Commercial mortgage loans on real estate	$	322.0	$	302.7	$	—	$	—	$	302.7
Other investments	5.6		5.6		1.5		—		4.1
Other assets	24.0		24.0		—		—		24.0
Total financial assets	$	351.6	$	332.3	$	1.5	$	—	$	330.8
Financial Liabilities
Policy reserves under investment products (Individual and group annuities, subject to discretionary withdrawal) (1)	$	7.4	$	7.7	$	—	$	—	$	7.7
Funds withheld under reinsurance	403.0		403.0		403.0		—		—
Debt	2,080.0		1,870.3		—		1,870.3		—
Total financial liabilities	$	2,490.4	$	2,281.0	$	403.0	$	1,870.3	$	7.7

	December 31, 2022
			Fair Value
	Carrying Value		Total		Level 1		Level 2		Level 3
Financial Assets
Commercial mortgage loans on real estate	$	295.6	$	278.2	$	—	$	—	$	278.2
Other investments	6.7		6.7		1.6		—		5.1
Other assets	12.7		12.7		—		—		12.7
Total financial assets	$	315.0	$	297.6	$	1.6	$	—	$	296.0
Financial Liabilities
Policy reserves under investment products (Individual and group annuities, subject to discretionary withdrawal) (1)	$	8.0	$	8.4	$	—	$	—	$	8.4
Funds withheld under reinsurance	366.6		366.6		366.6		—		—
Debt	2,129.9		1,932.7		—		1,932.7		—
Total financial liabilities	$	2,504.5	$	2,307.7	$	366.6	$	1,932.7	$	8.4

(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 tables above.

8. Deferred Acquisition Costs

The following table discloses information about deferred acquisition costs as of the dates indicated:


	For the Three Months Ended September 30,				For the Nine Months Ended September 30,
	2023		2022		2023		2022
Beginning balance	$	9,818.5	$	9,359.0	$	9,677.1	$	8,811.0
Costs deferred	1,090.7		1,170.2		3,249.9		3,507.7
Amortization	(1,005.4)		(951.4)		(3,023.2)		(2,740.9)
Ending balance	$	9,903.8	$	9,577.8	$	9,903.8	$	9,577.8

Assurant, Inc.

Notes to Consolidated Financial Statements (unaudited)

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

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.

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,
	2023		2022
Claims and benefits payable, at beginning of period	$	2,210.0	$	1,523.0
Less: Reinsurance ceded and other	(1,228.8)		(744.1)
Net claims and benefits payable, at beginning of period	981.2		778.9
Incurred losses and loss adjustment expenses related to:
Current year	1,953.4		1,728.0
Prior years	(30.7)		32.5
Total incurred losses and loss adjustment expenses	1,922.7		1,760.5
Paid losses and loss adjustment expenses related to:
Current year	1,250.8		1,106.2
Prior years	511.8		449.8
Total paid losses and loss adjustment expenses	1,762.6		1,556.0
Net claims and benefits payable, at end of period	1,141.3		983.4
Plus: Reinsurance ceded and other (1)	869.5		1,958.0
Claims and benefits payable, at end of period (1)	$	2,010.8	$	2,941.4

(1)Includes reinsurance recoverables and claims and benefits payable of $104.9 million and $960.4 million as of September 30, 2023 and 2022, 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 net favorable loss development of $30.7 million for the nine months ended September 30, 2023 and net unfavorable loss development of $32.5 million for the nine months ended September 30, 2022, as presented in the roll forward table above.

Global Lifestyle contributed $27.4 million and $44.5 million in net favorable loss development for the nine months ended September 30, 2023 and 2022, respectively. The net favorable loss development in both periods was attributable to nearly all lines of business in Global Lifestyle across most of the Company’s regions with a concentration on more recent accident years and based on emerging evaluations regarding loss experience. Positive trends in frequency and severity drove the significant favorable development in Global Automotive in 2022, but development was flat in 2023 due to inflationary impacts on parts and labor costs. 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 $30.0 million of net favorable loss development for the nine months ended September 30, 2023 and $22.8 million of net unfavorable loss development for the nine months ended September 30, 2022. The net favorable loss development for the nine months ended September 30, 2023 consisted of favorable non-catastrophe development of $40.4 million, partially offset by unfavorable development from prior catastrophe events of $10.4 million. The favorable non-

Assurant, Inc.

Notes to Consolidated Financial Statements (unaudited)

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

catastrophe development was driven by $37.7 million from lender-placed hazard primarily in accident year 2022 due to favorable frequency and severity trends from lower than anticipated inflation. The unfavorable development primarily consisted of $9.2 million related to Winter Storm Elliott (which occurred in late December 2022) as a result of higher severity than initially projected. The net unfavorable loss development for the nine months ended September 30, 2022 was attributable primarily to Tropical Storm Eta from accident year 2020, where the loss development pattern had been longer than typical and the average claim severities were higher than expected.

The sharing economy and small commercial lines of business, reported within non-core operations, contributed $32.0 million and $56.6 million in net unfavorable loss development during the nine months ended September 30, 2023 and 2022, respectively. The $32.0 million in net unfavorable loss development consisted of $32.4 million from sharing economy, driven by reserve increases related to higher frequency expectations for the number of claims closed with indemnity payment, partially offset by $0.4 million in favorable loss development from small commercial. The net unfavorable loss development for the nine months ended September 30, 2022 was attributable primarily to emerging adverse development trends on known claims in sharing economy, as well as reserve assumption revisions to reflect relevant industry benchmarks.

All others contributed $5.3 million and $2.4 million of net favorable loss development for the nine months ended September 30, 2023 and 2022 respectively.

Long-Duration Contracts

The Company adopted the targeted improvements accounting guidance for long-duration insurance contracts as of January 1, 2023, using a modified retrospective method on liabilities for future policy benefits and expenses to January 1, 2021 for long-term care insurance contracts that have been fully reinsured. The Company also elected to not apply the amended accounting guidance to long-duration contracts of legal entities sold and derecognized before the January 1, 2023 effective date as the Company has no significant continuing involvement with them.

Under the transition guidance, the long-term care insurance contracts are grouped into cohorts based on the contract’s issue year. Premiums are recognized when due as net earned premiums in the consolidated statement of operations. A future policy benefits and expenses reserve is recorded as the present value of estimated future policy benefits and expenses less the present value of estimated future net premiums. The net premium ratio (“NPR”) approach is used to recognize a liability when expected insurance benefits are accrued over the life of the contract in proportion to premium revenue. Policy expense assumptions are locked in as of December 31, 2020 as the long-term care insurance products are in run-off as of the transition date. Actual premiums and benefits are recognized on a quarterly basis in the consolidated statement of operations allocated in proportion to prior period cash flow projections at the cohort level. The updated cash flows used in the calculation are discounted using the discount rate used in the last premium deficiency test update prior to December 31, 2020 (the “original discount rate”) and presented as interest expense in the consolidated statement of operations. The revised NPR is used to measure benefit expense based on the recognized premium revenue in the period. The difference between the updated future policy benefits and expenses reserve opening period and previous ending period due to updating the NPR is presented as a remeasurement gain or loss (e.g., a cumulative catch-up adjustment) in policyholder benefits in the Company’s consolidated statements of operations.

A remeasurement of the ending reporting period future policy benefits and expenses reserve is calculated using the current upper medium grade fixed-income corporate bond instrument yield as of the consolidated balance sheet ending period (the “current discount rate”). The current discount rate used is an externally published US corporate A index weighted average spot rate that is updated quarterly and effectively matches the duration of the expected cash flow streams of the long-term care reserves. The difference between the ending period future policy benefits and expenses reserve measured using the original discount rate and the future policy benefits and expenses reserve measured using the current discount rate is recorded in accumulated other comprehensive income (“AOCI”) in the Company’s consolidated statements of comprehensive income.

The long-term care insurance contracts are fully reinsured and there is no impact to consolidated stockholders’ equity or net income as the reserves are fully reinsured.

Assurant, Inc.

Notes to Consolidated Financial Statements (unaudited)

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

The following table presents the balances and changes in the long-term care future policy benefits and expenses reserve:


	September 30, 2023		December 31, 2022
Present value of expected net premiums
Balance, beginning of period	$	34.2	$	37.1
Beginning balance at original discount rate	33.4		29.2
Effect of changes in cash flow assumptions (1)	—		9.4
Effect of actual variances from expected experience	3.3		(2.7)
Adjusted beginning of period balance	36.7		35.9
Experience variance (2)	—		(0.3)

Interest accrual	1.8		4.6
Net premiums collected	(3.2)		(6.8)

Ending balance at original discount rate	35.3		33.4
Effect of changes in discount rate assumptions	1.0		0.8
Balance, end of period	$	36.3	$	34.2

Present value of expected future policy benefits
Balance, beginning of period	$	462.4	$	658.5
Beginning balance at original discount rate	444.4		430.0
Effect of changes in cash flow assumptions (1)	—		12.3
Effect of actual variances from expected experience	4.3		(3.3)
Adjusted beginning of period balance	448.7		439.0
Experience variance (2)	1.0		(1.2)

Interest accrual	13.0		24.7
Benefit payments	(10.3)		(18.1)

Ending balance at original discount rate	452.4		444.4
Effect of changes in discount rate assumptions	20.2		18.0
Balance, end of period	$	472.6	$	462.4

Net future policy benefits and expenses	$	436.3	$	428.2
Related reinsurance recoverable	436.3		428.2
Net future policy benefits and expenses, after reinsurance recoverable	$	—	$	—

Weighted-average liability duration of the future policy benefits and expenses (in years)	12.1		12.7

(1)The increase in the effect of changes in cash flow assumptions is due to historical experience reflecting a decreasing trend in lapse and mortality rates on the long-term care insurance products for the year ended December 31, 2022.

(2)Experience variance includes adverse development resulting from the allocation of the premium deficiency reserve to the cohort level for issue years where net premiums exceed gross premiums.

Assurant, Inc.

Notes to Consolidated Financial Statements (unaudited)

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

The following table presents a reconciliation of the long-term care net future policy benefits and expenses to the future policy benefits and expenses reserve in the consolidated balance sheet:


	September 30, 2023		December 31, 2022
Long-term care	$	436.3	$	428.2
Other	74.7		79.7
Total	$	511.0	$	507.9

The following table presents the amount of undiscounted expected future benefit payments and expected gross premiums for the long-term care insurance contracts:


	September 30, 2023		December 31, 2022
Expected future benefits payments	$	834.5	$	850.0
Expected future gross premiums	$	70.9	$	76.2

The following table presents the amount of long-term care revenue and interest recognized in the consolidated statements of operations:


	September 30, 2023		September 30, 2022
Gross premiums	$	1.6	$	1.7
Interest expense (original discount rate)	$	5.6	$	5.3

The following table presents the weighted-average interest rate for long-term care insurance contracts:


	September 30, 2023		September 30, 2022
Interest expense (original discount rate)	5.95	%	5.95	%
Current discount rate	5.45	%	4.42	%

Concurrent with the transition period beginning January 1, 2021, the Company elected to account for the long-term care insurance contracts using reserve updates on a quarter lag whereby the September 30, 2020 cash flow and other assumptions are used for the pre-adoption December 31, 2020 future policy benefits and expenses reserve. Under the modified retrospective method, the long-term care insurance contracts are grouped into cohorts based on the contract’s issue year. Premium deficiency reserves are allocated proportional to the cohort’s reserve balance as of the transition date of December 31, 2020. At the cohort level, the NPR calculation is performed, and the unlocking of the NPR for cohorts in excess of 100% is recognized through opening retained earnings. A balance sheet remeasurement of the revised future policy benefits and expenses reserve is recorded using the current discount rate as of December 31, 2020 with the remeasurement amount recorded through AOCI.

Discount rate changes between the original and current discount rate as of December 31, 2020 were significant. The original discount rate at transition is a spot rate of 5.95% which is based on the most recent premium deficiency unlocking discount rate prior to transition using asset yields from investments allocated to the product at the time of the unlocking of the assumption. The current discount rate at transition was 1.69% reflecting prevailing interest rates as of December 31, 2020. The amended guidance has no impact to consolidated stockholders’ equity or net income on the long-term care insurance contracts as the reserves are fully reinsured.

Assurant, Inc.

Notes to Consolidated Financial Statements (unaudited)

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

The following table illustrates the impact of adoption on the long-term care insurance contracts:


Future Policy Benefits and Expenses, pre-adoption December 31, 2020	$	386.4
Effect of the remeasurement of the liability at current discount rate	250.8
Adjustment for loss contracts with NPR in excess of 100% under the modified retrospective approach	1.6
Adjusted balance, beginning of January 1, 2021	638.8
Less: reinsurance recoverable	(638.8)
Future Policy Benefits and Expenses, beginning of year January 1, 2021, net of reinsurance	$	—

The following presents the effect of transition adjustments on consolidated stockholders’ equity:


	January 1, 2021
	Retained Earnings		Accumulated Other Comprehensive Loss
Future Policy Benefits and Expenses	$	(1.6)	$	(250.8)

10. Debt

Debt Issuance

2026 Senior Notes: In February 2023, the Company issued senior notes due February 2026 with an aggregate principal amount of $175.0 million, which bear interest at a rate of 6.1% per year and were issued at a 0.035% discount to the public (the “2026 Senior Notes”). Interest on the 2026 Senior Notes is payable semi-annually in arrears on February 27 and August 27 of each year, beginning on August 27, 2023. Prior to January 27, 2026, the Company may redeem all or part of the 2026 Senior Notes at a redemption price equal to 100% of the outstanding principal amount of the 2026 Senior Notes to be redeemed, plus a make-whole premium as described in the 2026 Senior Notes and accrued and unpaid interest up to the redemption date. On or after that date, the Company may redeem all or part of the 2026 Senior Notes at any time at a redemption price equal to 100% of the outstanding principal amount of the 2026 Senior Notes to be redeemed, plus accrued and unpaid interest up to the redemption date.

In anticipation of the issuance of the 2026 Senior Notes, the Company entered into a derivative transaction to hedge the risk associated with changes in interest rates up to the date the 2026 Senior Notes were issued. The Company determined that the derivative qualified for cash flow hedge accounting and recognized a deferred gain of $1.4 million upon settlement which was reported through other comprehensive income. The deferred gain will be recognized as a reduction in interest expense related to the 2026 Senior Notes on an effective yield basis.

Debt Redemption

In March 2023, the Company used the net proceeds from the sale of the 2026 Senior Notes (and available cash on hand) to redeem $175.0 million of the $225.0 million then outstanding principal amount of its 4.20% Senior Notes due September 2023 (the “2023 Senior Notes”) plus accrued and unpaid interest up to the redemption date. In connection with the redemption, the Company recognized a net gain from the extinguishment of the debt of $0.1 million. The net gain resulted from the recognition of a previously deferred gain from the termination of a hedge of the interest rate risk associated with the redeemed notes, partially offset by the immediate recognition of the remaining deferred debt issuance costs relating to the redeemed notes.

In September 2023, the remaining $50.0 million outstanding principal amount of the 2023 Senior Notes was paid upon maturity.

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:

Assurant, Inc.

Notes to Consolidated Financial Statements (unaudited)

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


	Three Months Ended September 30, 2023
	Foreign currency translation adjustment		Net unrealized losses on investments		Net unrealized gains on derivative transactions		Unamortized net losses on Pension Plans		Accumulated other comprehensive loss
Balance at June 30, 2023	$	(360.3)	$	(480.9)	$	12.0	$	(93.5)	$	(922.7)
Change in accumulated other comprehensive loss before reclassifications	(11.3)		(123.5)		(2.0)		(0.4)		(137.2)
Amounts reclassified from accumulated other comprehensive loss	—		10.6		0.8		(2.5)		8.9
Net current-period other comprehensive loss	(11.3)		(112.9)		(1.2)		(2.9)		(128.3)
Balance at September 30, 2023	$	(371.6)	$	(593.8)	$	10.8	$	(96.4)	$	(1,051.0)

	Three Months Ended September 30, 2022
	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, 2022	$	(367.5)	$	(370.1)	$	11.1	$	(95.7)	$	(822.2)
Change in accumulated other comprehensive loss before reclassifications	(51.4)		(221.5)		—		0.4		(272.5)
Amounts reclassified from accumulated other comprehensive loss	—		12.2		(0.6)		(1.8)		9.8
Net current-period other comprehensive loss	(51.4)		(209.3)		(0.6)		(1.4)		(262.7)
Balance at September 30, 2022	$	(418.9)	$	(579.4)	$	10.5	$	(97.1)	$	(1,084.9)

	Nine Months Ended September 30, 2023
	Foreign currency translation adjustment		Net unrealized gains (losses) on investments		Net unrealized gains on derivative transactions		Unamortized net losses on Pension Plans		Accumulated other comprehensive loss
Balance at December 31, 2022	$	(394.0)	$	(513.2)	$	9.8	$	(88.8)	$	(986.2)
Change in accumulated other comprehensive loss before reclassifications	22.4		(102.3)		1.4		(0.1)		(78.6)
Amounts reclassified from accumulated other comprehensive loss (1)	—		21.7		(0.4)		(7.5)		13.8
Net current-period other comprehensive income (loss)	22.4		(80.6)		1.0		(7.6)		(64.8)
Balance at September 30, 2023	$	(371.6)	$	(593.8)	$	10.8	$	(96.4)	$	(1,051.0)

	Nine Months Ended September 30, 2022
	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 December 31, 2021	$	(326.9)	$	256.6	$	12.4	$	(92.1)	$	(150.0)
Change in accumulated other comprehensive loss before reclassifications	(92.0)		(874.3)		—		0.4		(965.9)
Amounts reclassified from accumulated other comprehensive loss	—		38.3		(1.9)		(5.4)		31.0
Net current-period other comprehensive loss	(92.0)		(836.0)		(1.9)		(5.0)		(934.9)
Balance at September 30, 2022	$	(418.9)	$	(579.4)	$	10.5	$	(97.1)	$	(1,084.9)

Assurant, Inc.

Notes to Consolidated Financial Statements (unaudited)

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

The following tables summarize the reclassifications out of 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,				Nine Months Ended September 30,
	2023		2022		2023		2022



Net unrealized losses on investments	$	13.5	$	15.5	$	27.5	$	48.5	Net realized losses on investments and fair value changes to equity securities
	(2.9)		(3.3)		(5.8)		(10.2)		Provision for income taxes
	$	10.6	$	12.2	$	21.7	$	38.3	Net of tax
Net unrealized (gains) losses on derivative transactions related to:
Interest rate derivatives	$	(0.7)	$	(0.7)	$	(2.7)	$	(2.3)	Interest expense
Foreign exchange derivatives	1.7		—		2.1		—		Underwriting, selling, general and administrative expenses
	1.0		(0.7)		(0.6)		(2.3)
	(0.2)		0.1		0.2		0.4		Provision for income taxes
	$	0.8	$	(0.6)	$	(0.4)	$	(1.9)	Net of tax
Amortization of pension and postretirement unrecognized net periodic benefit cost:
Amortization of net loss	$	0.2	$	1.1	$	0.8	$	3.3	(1)
Amortization of prior service credit	(3.4)		(3.4)		(10.2)		(10.2)		(1)

	(3.2)		(2.3)		(9.4)		(6.9)
	0.7		0.5		1.9		1.5		Provision for income taxes
	$	(2.5)	$	(1.8)	$	(7.5)	$	(5.4)	Net of tax
Total reclassifications for the period	$	8.9	$	9.8	$	13.8	$	31.0	Net of tax

(1)These AOCI components are included in the computation of net periodic pension cost. For additional information, see Note 13.

12. 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 common shares issuable upon vesting of performance share units (“PSUs”) and the purchase of shares under the Employee Stock Purchase Plan (the “ESPP”) using the treasury stock method. The outstanding restricted stock units (“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,
	2023		2022		2023		2022
Numerator
Net income	$	190.1	$	7.3	$	460.0	$	208.5
Less: Common stock dividends paid	(37.1)		(36.7)		(113.8)		(112.7)
Undistributed earnings	$	153.0	$	(29.4)	$	346.2	$	95.8

Denominator
Weighted average common shares outstanding used in basic per common share calculations	53,535,982		53,717,373		53,591,495		54,693,799
Incremental common shares from:
PSUs	206,124		345,887		232,889		425,887
ESPP	3,067		3,345		—		5,164
Weighted average common shares outstanding used in diluted per common share calculations	53,745,173		54,066,605		53,824,384		55,124,850
Earnings per common share – Basic
Distributed earnings	$	0.69	$	0.68	$	2.12	$	2.06
Undistributed earnings	2.86		(0.54)		6.46		1.75
Net income	$	3.55	$	0.14	$	8.58	$	3.81
Earnings per common share – Diluted
Distributed earnings	$	0.69	$	0.68	$	2.12	$	2.04
Undistributed earnings	2.85		(0.54)		6.43		1.74
Net income	$	3.54	$	0.14	$	8.55	$	3.78

Average PSUs totaling 52,715 and 66,144 for the three months ended September 30, 2023 and 2022, respectively, were anti-dilutive and thus not included in the computation of diluted EPS under the treasury stock method. Average PSUs totaling 57,895 and 59,669 for the nine months ended September 30, 2023 and 2022, respectively, were anti-dilutive and thus not included in the computation of diluted EPS under the treasury stock method.

13. 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 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.

Assurant, Inc.

Notes to Consolidated Financial Statements (unaudited)

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

The following tables present the components of net periodic benefit cost for the Plans for the three and nine months ended September 30, 2023 and 2022:


	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,
	2023		2022		2023		2022		2023		2022
Interest cost	$	7.0	$	4.1	$	0.6	$	0.3	$	0.1	$	—
Expected return on plan assets	(10.2)		(6.9)		—		—		(0.4)		(0.3)
Amortization of prior service credit	—		—		—		—		(3.4)		(3.4)
Amortization of net loss (gain)	—		0.8		0.2		0.5		—		(0.2)
Settlement loss	—		—		—		1.8		—		—
Net periodic benefit cost	$	(3.2)	$	(2.0)	$	0.8	$	2.6	$	(3.7)	$	(3.9)

	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,
	2023		2022		2023		2022		2023		2022
Interest cost	$	21.0	$	12.5	$	1.8	$	1.0	$	0.3	$	0.1
Expected return on plan assets	(30.8)		(20.7)		—		—		(1.2)		(1.0)
Amortization of prior service credit	—		—		—		—		(10.2)		(10.2)
Amortization of net loss (gain)	—		2.3		0.8		1.6		—		(0.6)
Settlement loss	—		—		—		1.8		—		—
Net periodic benefit cost	$	(9.8)	$	(5.9)	$	2.6	$	4.4	$	(11.1)	$	(11.7)

The Assurant Pension Plan funded status was $80.0 million at September 30, 2023 and $94.1 million at December 31, 2022 (based on the fair value of the assets compared to the accumulated benefit obligation). This equates to a 116% and 117% funded status at September 30, 2023 and December 31, 2022, respectively. During the nine months ended September 30, 2023, 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 2023.

14. Restructuring and Related Impairment Charges

In December 2022, the Company finalized its plan to realize greater efficiencies by continuing to simplify its business portfolio and leverage its global footprint to reduce costs. This included realigning its organizational structure and talent to support its business strategy (the “transformational plan”). The Company also accelerated its ongoing real estate consolidation to support work-from-home arrangements given its increasingly hybrid workforce (the “return to work strategy”).

In September 2023, the Company amended and extended the December 2022 plan to include additional actions within the initiatives described above, including further consolidation of its real estate portfolio and additional changes to its organizational structure. The Company now expects to complete these actions by mid 2024.

The following table summarizes the costs by major type that are recorded in underwriting, selling, general and administrative expenses in the consolidated statement of operations for the three and nine months ended September 30, 2023, cumulative costs incurred through December 31, 2022, the estimated remaining costs to be incurred and the estimated total costs. Substantially all of the charges are expected to be cash. Restructuring costs related to strategic exit activities (outside of normal periodic restructuring and cost management activities) are not allocated to a reportable segment.

Assurant, Inc.

Notes to Consolidated Financial Statements (unaudited)

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


	Costs Incurred for Three Months Ended September 30, 2023		Costs Incurred for Nine Months Ended September 30, 2023		Cumulative Costs Incurred Through December 31, 2022		Estimated Remaining Costs		Estimated Total Costs
Transformational plan:
Severance and other employee benefits	$	12.4	$	9.5	$	31.7	$	16.1	$	57.3
Total transformational plan	12.4		9.5		31.7		16.1		57.3
Return to work strategy:
Contract exit costs	0.1		5.0		15.5		1.3		21.8
Fixed asset impairment	0.7		0.7		1.1		0.8		2.6
Right-of-use asset impairment	—		3.1		4.6		2.8		10.5
Total return to work strategy	0.8		8.8		21.2		4.9		34.9
Total restructuring and impairment charges	$	13.2	$	18.3	$	52.9	$	21.0	$	92.2

The following table shows the roll forward of the accrued liability (included in accounts payable and other liabilities in the consolidated balance sheets) by major type.


	Transformational Plan		Return to Work Strategy (contract exit costs)
Balance at January 1, 2023	$	29.3	$	19.3
Charges incurred	11.9		7.1
Non-cash adjustment	(2.4)		(2.1)
Cash payments	(16.6)		(3.6)
Balance at September 30, 2023	$	22.2	$	20.7

15. 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 $2.9 million and $2.7 million of letters of credit outstanding as of September 30, 2023 and December 31, 2022, respectively.

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