Welcome to Assurant's Third Quarter 2025 Conference Call and Webcast. [Operator Instructions] It is now my pleasure to turn the floor over to Sean Moshier, Vice President of Investor Relations. You may begin.

Thank you, operator, and good morning, everyone. We look forward to discussing our third quarter results with you today. Joining me for Assurant's conference call are Keith Demmings, our President and Chief Executive Officer; and Keith Meier, our Chief Financial Officer. Yesterday, after the market closed, we issued an earnings release announcing our results for the third quarter 2025. The release and corresponding financial supplement are available on assurant.com. Also on our website is a slide presentation for our webcast participants. Some of the statements made today are forward-looking. Forward-looking statements are based upon our historical performance and current expectations and subject to risks, uncertainties and other factors that may cause actual results to differ materially from those contemplated by these statements. Additional information regarding these factors can be found in the earnings release, presentation and financial supplement on our website as well as in our SEC reports. During today's call, we will refer to non-GAAP financial measures, which we believe are important in analyzing the company's performance. For more details on these measures, the most comparable GAAP measures and a reconciliation of the two, please refer to the earnings release, presentation and financial supplement on our website. We'll start today's call with remarks before moving into Q&A. I will now turn the call over to Keith Demmings.

Good morning, everyone, and thank you for joining us. 2025 continues to be a remarkable year for Assurant. We delivered a very strong third quarter with double-digit earnings growth across both Global Housing and Global Lifestyle. Our performance during the quarter and year-to-date continues to drive significant cash generation and support our balanced capital allocation. Through our powerful B2B2C business model and diversified lifestyle and housing portfolio, we continue to execute for our partners, policyholders and shareholders. Our unwavering commitment to operational excellence continues to deliver exceptional client outcomes, customer experiences and differentiated returns. Through the first 9 months of the year, we've achieved 13% adjusted EBITDA growth and 15% adjusted EPS growth, both excluding reportable catastrophes. Given the strength of our business performance, we're increasing our 2025 outlook. We now expect full year adjusted earnings per share growth of low double digits and adjusted EBITDA growth approaching 10%, excluding cats, a significant increase from our initial expectations for both metrics. This upward revision further differentiates Assurant in the broader PMC industry as a provider of innovative services within specialized protection and insurance products. Our performance is a testament to our talented employees and their commitment to our clients and policyholders. Their dedication is the foundation of our success, and it's one of the reasons why we've been recognized by TIME as one of the world's best companies for the third year in a row. Let's turn to Global Lifestyle performance and highlights. Lifestyle earnings have continued to accelerate throughout 2025 and have increased 4% or 6% on a constant currency basis year-to-date, supported by double-digit growth in the third quarter. We remain well positioned to deliver full year growth across both Connected Living and Global Automotive. In Connected Living, performance has been the result of executing on our long-term…

Thanks, Keith, and good morning, everyone. As we near the end of 2025, we continue to make significant progress on our key priorities, driving growth and strong financial performance through our intense focus on innovation and product differentiation. We have continued to elevate customer experience, building on our long history of technology advancements with AI and digital automation while increasing expense efficiency and ensuring our capital position remains strong, putting Assurant in a position to create meaningful value over the long term. Our third quarter results reflect that significant progress. As Keith mentioned, we're proud of the underlying strength of both Global Housing and Global Lifestyle, which together drove third quarter adjusted EBITDA and EPS growth of 13%, both excluding cats, demonstrating positive momentum within our businesses. Let's take a look at our segment results, beginning with Global Lifestyle. In the third quarter, adjusted EBITDA increased 12% compared to last year, driven by double-digit earnings growth across Connected Living and Global Automotive. In Connected Living, earnings increased 11%, driven by strength within Financial Services, particularly a new card benefits program launched late last year. Subscriber growth in mobile with 2.1 million net additions year-over-year, largely from expanding partnerships with U.S. clients and optimized global trade-in performance supported by growth across U.S. cable and carrier partners as well as our certified pre-owned business. In Global Auto, adjusted EBITDA was up 15%, which includes a net non-run rate benefit of approximately $6 million. When normalized for this non-run rate item, adjusted EBITDA was up 6%, growing both on a sequential and year-over-year basis from improved loss experience. We're encouraged by the improved loss experience in our vehicle service contract business and stable earnings overall. We continue to benefit from prior rate increases and enhancements to our claims processes and product designs while…

[Operator Instructions] Our first question will come from Mark Hughes with Truist Securities.

You referred to a pipeline. I think you're talking about Homeowners or Renters and said you had a strong pipeline, which doesn't seem like the usual thing in that line of business. Could you expand on that?

Sure. I think we've seen a lot of momentum really across the Board in housing. Certainly, the fundamental performance of the business has been strong, but we've been investing pretty deeply the last few years in all of our technology, operational capabilities. I think our lender-placed solution is unquestionably market-leading, and we do see further opportunities to drive growth with new clients over time. Even though we've got a strong leadership position, there's still opportunity for white space. And then Renters, you've seen pretty consistent PMC growth for the last 3 years, and we expect that, that will continue as we look forward.

Yes, very good. In Global Auto, the loss performance was better year-over-year, but stable sequentially. Is it hit kind of an area that you think is sustainable or likely to hold steady going forward?

Yes. Thanks, Mark. And I'd say, overall, for Auto, we're really pleased with the quarter, growing EBITDA 15% year-over-year. I think when we look at the loss performance, our vehicle service contract side, I think all of our rate actions that we've taken place over 20% over the last few years and the product changes, I think we've seen that become more stable. So we're pleased with that. And then we touched on the GAAP side as well. Those loss exposures continue to diminish as expected. So we should expect those results continue to improve. So overall, we feel good about the business has stabilized well this year.

Then one more, if I might sneak one in. In the Homeowners, I think you've been helped somewhat by the hard market. I think your product has been priced right for a lot of Homeowners. If the housing market starts to soften a little bit or broader homeowners market, do you think that has meaning for your top line prospects?

Yes. I mean there's lots of dynamics at play. I'd say, for sure, we've benefited from the challenging voluntary market. We've seen a lot of policy growth as a result of that. That continue certainly through the year, and we'll have to watch where that goes. And then we've also driven growth with clients in different portfolios. So I think we're well positioned. It's also countercyclical. So should there be a downturn in the economy generally, we may see an uptick in placement rates. So we'll have to monitor how all these factors play together.

Our next question comes from Charlie Lederer with BMO.

I think we lost you.

Can you hear me?

Yes.

Okay. Sorry. So just starting on the new partnerships in Connected Living. Is there anything you can quantify or color you can give around the impact you're expecting from the reverse logistics and Geek Squad deals? Are these immediate revenue generators? And what kind of trajectory are you expecting? And how should we think about the investment spend around these next year relative to the $15 million this year?

Yes, it's a great question. So certainly, the -- on the reverse logistics side, we're really excited about being in a position to announce that to the market. It's incredibly strategic, and we're co-locating with a client in the facility. So it's terrific. It certainly will begin to contribute in 2026. We'll continue to make investments, it will be positive as we think about EBITDA impact next year. And then I'd say something similar for the Best Buy opportunity as well. It will contribute in '26. We've made a lot of investments this year. That will certainly taper off, and it will help us in our go-forward EBITDA.

Got it. And then on the buyback guide, you increased it from $250 million to $300 million to the top end of that range. I guess, given the lower cats this year, would you expect your '26 outlook on capital deployment to be a little bit higher, too? Or how are you thinking about capital deployment next year?

Yes. I think, first of all, I would say we feel really good about the strength of our capital position today. We've got $613 million in Holdco liquidity. So I think that really gives us that flexibility that we want to have. And we try to have a balanced approach, Charlie, as we typically talk about. So Keith highlighted some organic investments that we continue to make. In addition, we always have an M&A pipeline that we're working. We've announced a few smaller ones this year. We had Gestauto in Brazil that helped our auto business. We had OptoFidelity that helped our device care centers and adding some technology there. And then we also acquired U-Solutions in Japan that furthered our walk and repair capabilities in that market. So you'll see us continue to invest in M&A opportunities. And then in terms of the buybacks, we felt really strong about that. That's why we signaled going to the top end of our range. And so we -- as we exit this year, we expect to be in a strong capital position, and we'll provide more guidance on share buybacks next year on our next earnings call. And then lastly, I would just say we also have done 20 straight years of dividend increases as well. So we like being able to have a balanced and a strong position across the Board.

Yes. And maybe just to add a little flavor for 2026. We'll certainly talk more about buyback expectations and capital deployment in February. We'll see where Q4 ends up. That will help us understand the drivers as we think about 2026 performance to provide the guidance. But I would say, as we think forward, we're incredibly pleased with the momentum that we have really across all the businesses. We do expect to grow all 3 for the full year, Connected Living, Auto and Housing. Certainly, this quarter, we had double-digit growth in each of those businesses. So we've got a lot of momentum, which is very good. And as we think about '26, we do expect Lifestyle to continue to grow. We'll certainly benefit from the investments we've made the past couple of years. And then we do expect underlying growth in housing to continue. So setting aside the PYD, following 3 years of really strong performance, we expect to see that continue. And then we will have a higher corporate loss in '26. Keith Meier touched on it relative to our '25 guidance. We are expecting to launch a new program in an adjacent business, and we'll talk more about that in detail at February as well.

Maybe just one more. On the 2 Renters PMC deals you talked about, can you dimension the opportunity there relative to the growth we've seen this year?

Yes. I think we feel good about the consistency of the performance in Renters. I mean we've had 13 quarters in a row of double-digit growth. Our largest partners are growing. Really excited we renewed our largest PMC client to a multiyear agreement. We did a really successful book roll and then adding additional PMCs. That's what's going to continue to fuel the momentum that we've seen, and we expect that to continue.

Our next question comes from James Koehne with Morgan Stanley.

This is James Koehne on for Bob. So my first question relates to Housing. So my understanding is that you have 60-plus percent market share in lender-placed. Curious how much you think you could realistically grow share in the intermediate term? And do you have aspirations to grow share to a certain level in the intermediate term?

Yes. I mean we've -- like I said earlier, we've got a strong right to win. We're incredibly focused on having the best solution and capabilities in the market. There's some big client opportunities where we don't perform that service today. So obviously, we're laser-focused on those. I wouldn't say we've set a threshold or a target. We're trying to acquire clients all the time in every one of our businesses and lender-placed is no exception to that.

Got it. Great. My second question is a related one. So on the notable drivers supporting housing results recently, so higher AIV, the hardening of the voluntary market, solid placement rates. Curious how you would rank them in terms of their contribution to the recent uptick in segment growth? And how are you thinking about their relative contribution to growth going forward?

Yes. I mean I think the growth in our policies certainly has been the biggest driver as we think about the housing performance. We're up 8% year-over-year in terms of our policy counts. That certainly shows up in the placement rate, and it's a result of a lot of it from a hard voluntary market. Rate in AIV, I think, has been a little bit favorable this year, but it's not a dramatic change. AIVs are certainly up but normalizing. So I would definitely put our policy growth at the top of the list.

Yes. And I think certainly, the placement rates are driving that policy growth and the AIVs being up 5% year-over-year, that certainly contributes as well. And then as we talked about earlier, we also see new opportunities to add additional clients on top of that. So when you combine it, that's one of the things that makes that business so powerful is there's multiple ways to grow.

Our next question comes from Tommy McJoynt with KBW.

This is [ Molly Nolan ] calling in for Tommy McJoynt. My first question is about the iPhone upgrade cycle. It has been getting a lot of attention in the media. That's led to questions about how downstream suppliers and service providers can benefit. So can you just remind us about Assurant's role and opportunity in trade-in upgrade and adding covered device counts specific to the iPhone upgrade cycle?

Yes. I think what we've seen certainly is a robust cycle. I think we saw some demand pull forward in the second quarter. And I think we've seen, as we outlined, some additional contributions to our trade-in business as a result of some of that as well. The big driver for us in our business really is the protection programs. And often, the customer that has their protection program on their last phone will roll it over to the new phone. So that's what generates a lot of stability for our business as we go through the various cycles. But certainly, overall, it's a positive dynamic for us.

Yes. And we -- if we look at the clients that we operate the protection services with, particularly in the U.S., our clients gained 81% of the postpaid net adds. So to the extent that there is elevated switching, strong promotional activity and as you said, strong demand for the new iPhone new devices, that tends to bode well for us both on protection as our clients grow, but also we support a lot of different clients as well with trade-in opportunities. So I feel good about how we're positioned there.

Great. My second question would be just understanding investments are part of the business cycle. Are there any major investment projects that you currently have planned for next year that we should think about as we think about margin expansion opportunity across the business lines?

Yes. I think the one thing that we're trying to signal today is we will be launching a new program in an adjacent business early next year. We're excited to share more details, and it will create a long-term vector for growth for the company. We're looking to have the corporate investment be a little higher in 2026, which we'll talk more about in February. But that's probably the big thing that we're signaling that we're going to talk about in more detail to come.

Yes. And we've started already to invest in that a little bit this year, and that's why we've raised the number on our corporate loss by $5 million this year that takes that into account.

[Operator Instructions] Our next question comes from Mark Hughes with Truist Securities.

Welcome back Mark.

Glad to be back. In Global Housing, if you look at the loss ratio, is there a material difference in the loss ratio between lender-placed policies and voluntary policies?

I think in general, I think the premium rates are different, Mark. So I think there is a -- I think they would correspond, I think, generally. And I think that it also comes into play where our expenses for tracking go into our rates for lender-placed. So there's the lender-placed tracking expenses versus typically commissions on a voluntary basis. But overall, depending on the mix, those would probably be the bigger differences more so than the loss ratios.

Yes. What is the magnitude of the top line differential, the premium differential between the two?

We look at our lender-placed rates and what we can compare them to is the prior policy that a Homeowner has held, and it varies from state to state. Some of them are a little bit higher, some of them are a little bit lower. But I would say, overall, over the last couple of years, and I think it's helping our placement rate is I think our product is becoming more competitive as the voluntary market raises their rates significantly. I think all the work we've done to drive expense efficiencies, our expense ratio was in the mid-40s a couple of years ago. Now it's in the high 30s. So us not having to raise rates as much as the voluntary market, I think, has certainly helped our and contributed to our improved placement rates.

Yes. When you talk about a new program that you're planning to talk about in February, is that kind of a new line of business? Is that what we're talking about?

Yes. It's a new line of business that we're not in today, which is why we've put it in corporate. The effort is being driven by our Chief Innovation Officer, who used to run the Connected Living business for the company. And yes, we're trying to create a new pathway for long-term growth, and we're very excited to talk more about it later.

Yes. Your reinsurance buy, it seems like the reinsurance market is going to be more favorable for you next year. Would your preference be for reducing your retention for larger events or reducing cost on the program?

Yes. I would first say that we probably buy in to reduce our volatility more than typical. We'll certainly evaluate that as we look at the pricing. But I do think we're in a good position going into next year. We didn't have anything that touched our reinsurance tower this year. So I think that's positive. And then obviously, this last quarter having very low cat activity should certainly be a positive as well. Our renewal kicks in on April 1. That's when we place the next year, and we certainly look forward to sharing more with you on that. The only other thing I would say is it also the mix of business in the geography in which we've been growing. And so if you look at our reinsurance rates last year versus this year, we expect them to be on a normalized basis, pretty similar, just over $200 million. And I think that's a little less than we were expecting this year because our Florida business hasn't grown, but we've grown significantly in less cap-prone states. So we've been really happy with the mix of business in terms of where we've grown for our housing business.

There are no further questions at this time. I will now pass the call back to Keith Demmings.

All right. I just want to say thank you to everyone for joining. As we've said, we're excited about the momentum we have across our businesses and certainly look forward to delivering our ninth consecutive year of profitable growth, and we'll talk to everybody again in February. Have a great day.