Keith Meier
Executive Vice President, Chief Financial Officer at Assurant
Thanks, Keith, and good morning, everyone. Before reviewing the quarterly results, I'd like to share my perspectives as I'm about to wrap up my first 90 days as Assurant's CFO. During my time at Assurant, I've been fortunate to have led several businesses as well as take on a variety of other roles across the organization, including most recently, leading our technology and operational teams. These experiences have provided me with deep insights into our global clients and the understanding of what is needed to deliver a high level of business performance, always backed by strong financial expertise and discipline.
As CFO, driving growth and financial performance will continue to be my priorities. I'm focused on ensuring our capital position remains strong as we create additional shareholder value and drive profitable growth through further innovation and differentiation within our product portfolio.
As I look toward the future, I'm also focused on continued expense efficiencies by utilizing digital and AI technology, which also enables us to deliver better customer experiences. Lastly, I've appreciated the opportunity to meet with many of our investors, employees, and clients over the last several months and their willingness to share observations about Assurant as I began my tenure as CFO. Our discussions have enabled me to better shape my views and the path going forward.
Now, let's talk about our fourth quarter financial results, which reinforced the strength of our businesses and the performance that we've seen throughout the year. For the quarter, adjusted EBITDA grew 29% to $382 million and adjusted EPS increased by 38% to $4.90, both excluding reportable catastrophes. Adjusted earnings and EPS growth were driven by year-over-year growth in both housing and lifestyle. Our capital position remained strong, generating $280 million of segment dividends in the fourth quarter and ending the year with $606 million of holding company liquidity. This allowed us to return $169 million to shareholders in the quarter, including $130 million of share repurchases.
Let's review the businesses beginning with Global Lifestyle. For the quarter, adjusted EBITDA grew 12% to $205 million, led by strong earnings growth of 23% within Connected Living as our U.S. mobile protection programs continued to grow. Higher yields on invested assets also contributed to the improved fourth quarter results. Globally, our trade-in programs represent a critical component of our device lifecycle value proposition, as well as a fee-based income driver supporting the growth of our mobile business. Throughout 2023, we serviced over 25 million devices, including 7.5 million in the fourth quarter, which represented a high watermark for the year. While trade-in results were down modestly year-over-year, we saw fee income growth from higher sale prices for used devices and contributions from new U.S. trade-in programs. Internationally, we continue to be impacted by subscriber declines in Japan, but have stabilized performance in a challenging macroeconomic backdrop.
In Global Auto, fourth quarter adjusted EBITDA was relatively flat as higher claims costs from inflation were offset by higher investment income. Claims were also elevated from the expected normalization of auto ancillary products and from international clients. During the latter part of the year, we saw positive signs in U.S. loss trends as we began to benefit from prospective rate increases that were implemented.
Turning to net earned premiums, fees and other income. Lifestyle grew by $268 million, or 13%. Growth from Global Automotive, which increased 14%, was due to $85 million of non-run rate premium adjustments with no corresponding earnings impact, as well as prior-period sales of vehicle service contracts. Connected Living's net earned premiums, fees and other income increased 12%, benefiting from contributions from new trade-in programs, higher prices on used mobile devices, and modest growth in North America mobile subscribers.
Looking ahead to 2024, we expect Global Lifestyle's adjusted EBITDA to grow, driven by both Connected Living and Global Automotive. We expect growth in Connected Living to be led by the continued expansion of our U.S. business. We expect Japan and Europe to remain generally stable throughout the year.
In Global Auto, we expect rate actions taken over the past 18 months to drive improvement over time, beginning in 2024. Investments related to new client implementations will temper growth in 2024 for lifestyle, but are critical levers to expand our portfolio and strengthen our business over the long term. We continue to monitor foreign exchange impacts, broader macroeconomic conditions, and interest rates, which may impact the pace and timing of growth. In terms of full-year net earned premiums, fees and other income, Lifestyle is expected to grow mainly from our Connected Living business.
Moving to Global Housing. 2023 was truly a strong year. We drove growth from the actions taken over the past few years to ensure rate adequacy and drive expense leverage, while benefiting from the streamlining that we undertook to simplify our portfolio. Fourth quarter adjusted EBITDA was $186 million, which included $22 million of reportable cats. Excluding reportable cats, adjusted EBITDA increased by nearly 50%, or $68 million to $208 million. Two-thirds of the increase was driven by favorable non-cat loss experience in Homeowners, including a favorable year-over-year impact of $35 million related to prior-period reserve development. This was comprised of $40 million of reserve reductions in the current quarter compared to a $5 million reduction in the fourth quarter of 2022. The remainder of the adjusted EBITDA increase was from continued top-line growth in Homeowners from higher premiums and an increase in the number of in-force policies.
Higher investment income also contributed to earnings growth. Growth was partially offset by incremental expenses to support new business and an increase to our catastrophe reinsurance premium. For Renters and Other, earnings were flat as growth in our property management channel was offset by softer affinity channel volumes.
For the full year 2024, we expect Global Housing adjusted EBITDA, excluding reportable cats, to grow, driven by continued top-line momentum in Homeowners. In 2023, we benefited from $54 million of favorable prior-year reserve development. Our expectation is to deliver growth in Housing in 2024, overcoming the $54 million of favorable prior-year reserve development, demonstrating the strength of the Housing business.
As Keith discussed, we will begin onboarding 1.8 million loans from Bank of America in the first quarter. When fully onboarded, we expect the placement rate of the book to be below Assurant's current portfolio average of 1.8%, which may impact overall placement rate trends. Due to implementation expenses, we do not expect these loans to contribute significantly to adjusted EBITDA in 2024.
In terms of our cat reinsurance program, we have transitioned to a single April 1 placement date beginning this year. This greatly simplifies our placement process while maintaining comprehensive coverage in the market. As this is a transition year, we placed virtually all of our 2024 program in January, with some smaller components remaining for the April placement. For our 2024 program, our per-event retention will increase to $150 million, aligning with a one-in-five-year probable maximum loss, or PML as we continue to optimize risk and return. This is consistent with our 2023 program. We've expanded our risk protection to align with exposure by increasing our top end limit to protect against a one-in-265 PML event.
Over the past two years, we've continued to increase our capital protection, increasing the top end of our program from a one-in-174 PML in 2022 to a one-in-225 PML in 2023, and now a one-in-265 PML in 2024. Reflecting on these expected changes, we now estimate the appropriate cat load to be $155 million for 2024.
Given the exit of our international property business and the better market pricing as we leverage our strong reinsurer relationships, we expect a modest overall cost savings in 2024. We will provide further updates on the reinsurance program in May.
Moving to Corporate. The fourth quarter adjusted EBITDA loss was $30 million, a $3 million year-over-year increase, mainly due to higher employee-related expenses. For 2024, we expect the Corporate adjusted EBITDA loss to approximate $105 million.
Turning to capital management. As we look forward to 2024, we expect to continue to generate significant capital and focus on maintaining balance and flexibility to support business growth. For the full year, we expect our businesses to generate meaningful cash flows, approximating two-thirds of segment adjusted EBITDA, including reportable cats. Cash flow expectations assume a continuation of the current macroeconomic environment and are subject to the growth of the businesses, investment portfolio performance, and rating agency and regulatory requirements. We repurchased $200 million of common stock in 2023 and currently expect share repurchases to be in the range of $200 million to $300 million for 2024, which will depend on strategic M&A opportunities, market conditions, and cat activity.
As you can see, we are well-positioned to deliver another year of growth in 2024 through the power of the Assurant franchise.
I'll now turn the call back to Keith Demmings to share his views on performance as supported by our differentiated business model. Keith?
