Keith Demmings
President & Chief Executive Officer at Assurant
Thanks Sean and good morning, everyone. Our third quarter results further supported our strong year-to-date performance. Through the first nine months of the year, adjusted EBITDA increased by 15% and adjusted EPS grew by 21%, both excluding catastrophes. Results were led by sustained outperformance within global housing as well as underlying growth within our Connected Living business which was muted by incremental investments in new partnerships and programs and unfavorable foreign exchange. Our year-to-date momentum has positioned us to exceed our previous expectations. Excluding catastrophes, we now expect adjusted EBITDA to increase low double digits for the second consecutive year, and adjusted earnings per share to increase mid to high teens led by business growth and strong share repurchases.
Once again, we've outperformed the broader P&C industry both short and long term, reflecting the unique and differentiated nature of our combined Housing and Lifestyle business model. Let's begin with our year-to-date business highlights. In Global Lifestyle, year-to-date performance was relatively flat versus the prior period, reflecting elevated claims experience in Global Automotive as well as impacts from unfavorable foreign exchange of 2% or $10 million above our expectations from earlier in the year. Within Connected Living, year-to-date adjusted EBITDA increased 3% or 5% on a constant currency basis, as we continue to invest in new partnerships and programs to support future growth.
Excluding investments of approximately $21 million for the first nine months of the year, Connected Living adjusted EBITDA growth was strong at 11% on a constant currency basis. One prime example of those investments includes our new Innovation and Device Care center located just outside of Nashville, supporting our mobile business. In addition to repurposing millions of devices per year, the new state-of-the-art facility employs innovative ways to leverage automation, robotics and AI. This will create greater value within our global supply chain, while driving growth in the secondary device market.
The Nashville facility demonstrates our investments in innovation, allowing us to continuously improve our customer experience as we operate through end-to-end partnerships with our mobile clients, a critical competitive advantage for Assurant.
Within financial services, on October 1, we launched a new program with Chase Card Services in our growing card benefits business. Beginning at program launch, we're providing end-to-end delivery for approximately 15 travel and purchase protection benefits, including underwriting, claims processing and benefit servicing to millions of Chase cardholders. We're excited about several new clients and programs targeted for 2025 adding to our growing portfolio. Similar to '24, these new opportunities may require incremental investments.
Moving to Global Automotive, our auto business has experienced elevated claims costs in both our vehicle service contract business and our GAP product throughout 2024. Over the past two quarters, we've started to see some positive early signs with a stabilization of underlying claim severity trends in our vehicle service contract business. Claims inflation impacts have begun to moderate, and our loss ratio is beginning to benefit from rate increases we've taken over the past two years. Within our GAP product, elevated losses have continued as anticipated, but we continue to expect higher claims to be short term in nature in comparison to the vehicle service contract business.
In addition, our proactive partnership with several clients should enable us to transition most of the risk and reduce a large portion of our claims exposure over time. We remain focused on driving actions to improve auto results, while benefiting from moderating inflation impacts in 2025 and beyond. We're excited about the long-term trajectory of this business.
Now let's turn to global housing. I want to begin by thanking all of our employees who supported policyholders impacted by recent weather events over the last several months, including multiple major hurricanes. We play an important role in safeguarding our policyholders as we processed approximately 35,000 claims to date associated with these events. It's an important reminder of the critical role our lender placed product plays in the U.S. mortgage industry, removing the risk of uninsured loss for lenders, investors and homeowners.
It's crucial to provide all homeowners with access to insurance. For that reason, we continue to work closely with each state to offer coverage and protection to homeowners at appropriate rates. Looking at global housing's year-to-date results, we've demonstrated continued strong performance, particularly within our homeowners' business. Over the first nine months of the year, earnings increased 34%, excluding reportable catastrophes. In our lender-placed business, we continue to benefit from key competitive advantages, utilizing various growth levers over the past two years to sustain results, including meaningful expense leverage, scale from new partners and product safeguards to address macroeconomic factors like inflation. Results were driven primarily by continued policy growth as the placement rate increased to 1.92%, a 12-basis point improvement since year end and a 6-basis point improvement sequentially.
Policy growth has been led by several new partnerships and portfolios as well as from states where it's become more difficult to secure voluntary homeowners' coverage. Within renters, adjusted EBITDA has also shown year-to-date growth supported by continued expansion in our Property Management Company or PMC channel. Growth in our PMC channel has been supported by technology innovation aimed at enhancing our digital customer experience. This has included the rollouts of Assurant TechPro and our Cover360 platform, leading to higher penetration with a simplified resident enrollment process. Overall, the housing business has benefited from our unique competitive advantages throughout lender placed and renters, showcasing its resiliency and outperformance over various macroeconomic environments.
Turning to our enterprise outlook, as I mentioned earlier, given the strength of our year-to-date results, we now expect full year adjusted EBITDA to grow low double digits, and adjusted earnings per share to increase mid to high teens, both excluding catastrophes. This represents an increase to both metrics above our expectations, demonstrating the continued strength of our financial performance. For the year, we continue to anticipate strong growth within global housing with modest growth expected in Global Lifestyle as we fund incremental investments in connected living.
Our ability to sustain profitable growth year after year is a true reflection of our unique and advantaged business model. Assurant's performance is the result of a multi-year transformation which has significantly enhanced our business mix, risk profile and market positioning. We've simplified and optimized Assurant to focus on specialized attractive markets with long-term secular tailwinds within lifestyle and housing, while selling pre-need and employee benefits and exiting health and other non-core businesses. In the markets we operate in, we have leadership positions and competitive advantages through our protection solutions across devices, automobiles and homes. We are well positioned to win due to our highly scaled and deeply integrated B2B2C partnerships, where we work with our clients to innovate and create flexible solutions for their end consumers. At the same time, we've enhanced Assurant's risk profile by focusing on capital efficient businesses within lifestyle and housing.
Through purposeful transformation, we've enhanced our ability to drive long-term performance and cash generation, attracting growth partnerships with large, sophisticated clients and become increasingly more capital efficient. I'm proud of the long-term outperformance we've achieved against the broader P&C market.
Slide 10 demonstrates our historical outperformance, including a five-year history of double-digit growth. Based on our current outlook for 2024, annual growth rates since 2019 are expected to average 11% for adjusted EBITDA and 17% for adjusted EPS, both excluding catastrophes. Given our historical performance and our unique and differentiated business model, we believe we have meaningful valuation upside in particular as compared to the S&P1500 P&C Index, a broad index of 32 members now including Assurant. Overall, we see a compelling path for growth ahead, and believe Assurant represents an attractive investment.
I'll now turn it over to Keith Meier to review our third quarter results and business trends impacting our 2024 outlook.
