The following dialogue and evaluation of our monetary situation and outcomes of operations ought to be learn together with our Consolidated Financial Statements and accompanying notes included elsewhere on this Report. It comprises ahead-wanting statements that contain dangers and uncertainties. Our precise outcomes would possibly differ materially from these projected in these ahead-wanting statements because of this of numerous elements, together with these mentioned beneath and elsewhere on this Report, notably below the headings "Item 1A - Risk Factors" and "Forward-Looking Statements."
General
Sale of Global Preneed
InAugust 2021 , we accomplished the sale of the disposed Global Preneed enterprise to CUNA for an combination buy worth at closing of$1.34 billion in money. For further info, consult with Note 4 to the Consolidated Financial Statements included elsewhere on this Report. Prior to the sale, we decided that the disposed Global Preneed enterprise met the factors to be categorized as held on the market and that the sale represented a strategic shift that had a serious affect on our operations and monetary outcomes. Accordingly, the outcomes of operations of the disposed Global Preneed enterprise are introduced as web earnings from discontinued operations within the consolidated statements of operations and segregated within the consolidated assertion of money flows for all intervals introduced, and the property and liabilities for the disposed Global Preneed enterprise have been categorized as held on the market and segregated as ofDecember 31, 2020 within the consolidated steadiness sheets. Transactions between the disposed Global Preneed enterprise and companies in our persevering with operations weren't eradicated to appropriately replicate the persevering with operations and the property, liabilities and outcomes of the disposed Global Preneed enterprise. Refer to "-Results of Operations - Discontinued Operations" beneath and Note 4 to the Consolidated Financial Statements included elsewhere on this Report.
Reportable Segments
We report our outcomes by way of three segments: Global Lifestyle,Global Housing and Corporate and Other. Corporate and Other consists of actions of the holding firm, financing and curiosity bills, web realized good points (losses) on investments and truthful worth adjustments to fairness securities, curiosity earnings earned from brief-time period investments held, earnings (bills) primarily associated to our frozen profit plans, quantities associated to companies beforehand disposed of by way of reinsurance and the run-off of theAssurant Health enterprise. Corporate and Other additionally consists of goodwill impairments, the overseas foreign money good points (losses) from remeasurement of financial property and liabilities, adjustments in the truthful worth of spinoff devices and different bills associated to merger and acquisition actions, in addition to different extremely variable or uncommon gadgets aside from reportable catastrophes (reportable disaster losses, web of reinsurance and shopper revenue sharing changes, and together with reinstatement and different premiums). 42 -------------------------------------------------------------------------------- The following dialogue covers the 12 months endedDecember 31, 2021 ("Twelve Months 2021"), the year endedDecember 31, 2020 ("Twelve Months 2020") and the 12 months endedDecember 31, 2019 ("Twelve Months 2019"). Please see the dialogue that follows, for every of these segments, for a extra detailed comparative evaluation. Executive Summary Overview We have undertaken a number of acquisitions and tendencies within the present and prior years, that are mirrored in our outcomes. InAugust 2021 , we accomplished the sale of the disposed Global Preneed enterprise to CUNA for an combination buy worth at closing of$1.34 billion in money. For further info, consult with Notes 3 and 4 to the Consolidated Financial Statements included elsewhere on this Report. InJune 2021 , we issued$350.0 million of 2.65% senior notes dueJanuary 2032 and used the proceeds, together with money available, to redeem all of the$350.0 million excellent combination principal quantity of our 4.00% senior notes dueMarch 2023 and paid accrued curiosity, associated premiums, charges and bills inJuly 2021 . See " - Liquidity and Capital Resources" beneath for additional particulars.
Summary of Financial Results
Consolidated web earnings from persevering with operations elevated$93.1 million , or 18%, to$613.5 million for Twelve Months 2021 from$520.4 million for Twelve Months 2020. The enhance was primarily pushed by greater web realized good points on investments and truthful worth adjustments to fairness securities, together with$67.5 million of truthful worth adjustments in unrealized fairness positions that went public throughout Twelve Months 2021, in comparison with web losses in Twelve Months 2020, in addition to progress in Global Lifestyle. This was partially offset by the absence of an$84.4 million tax profit that was recorded in Twelve Months 2020 associated to the utilization of web working losses in reference to the 2020 Coronavirus Aid, Relief, and Economic Security Act (the "CARES Act"). Global Lifestyle phase web earnings elevated$47.5 million , or 11%, to$484.7 million for Twelve Months 2021 from$437.2 million for Twelve Months 2020, primarily pushed by important progress inGlobal Automotive , continued growth in cell inside Connected Living and higher contributions fromGlobal Financial Services and Other.Global Automotive outcomes included underlying progress from prior interval gross sales pushed by expanded and new shopper relationships globally, favorable loss expertise in choose ancillary merchandise and$8.2 million of one-time advantages within the first half of Twelve Months 2021 that aren't anticipated to repeat. Mobile progress was primarily pushed by robust commerce-in volumes, together with HYLA, and improved efficiency inAsia Pacific . Results have been partially offset by investments in our in-retailer service and restore capabilities. Global Lifestyle web earned premiums, charges and different earnings elevated$410.1 million , or 6%, to$7.75 billion for the Twelve Months 2021 in contrast with$7.34 billion for Twelve Months 2020, primarily pushed byGlobal Automotive from robust gross sales throughout theU.S. , in addition to progress in Connected Living from prolonged service contracts. In cell, greater commerce-in volumes and subscriber progress have been offset by declines from runoff applications and the$176 million discount from the beforehand disclosed program contract change.Global Housing phase web earnings elevated$10.8 million , or 5%, to$244.6 million for Twelve Months 2021 from$233.8 million for Twelve Months 2020. Segment web earnings for Twelve Months 2021 included$113.9 million of reportable catastrophes in comparison with$137.2 million of reportable catastrophes for Twelve Months 2020. Excluding reportable catastrophes, phase web earnings decreased$12.5 million , primarily on account of greater non-disaster loss expertise from an anticipated enhance to extra normalized ranges, in addition to a$12.3 million 12 months-over-12 months enhance inside small business that was primarily associated to reserve strengthening for run-off claims. This was partially offset by greater premium charges and common insured values inLender-placed Insurance .
million
billion
Housing
Specialty and Other merchandise from shopper runoff.
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Corporate and Other phase web loss decreased$34.8 million , or 23%, to$115.8 million for Twelve Months 2021 from$150.6 million for Twelve Months 2020, primarily as a result of greater web realized good points on investments and truthful worth adjustments to fairness securities, in comparison with web losses in Twelve Months 2020, partially offset by the absence of an$84.4 million tax profit associated to the utilization of web working losses in reference to the CARES Act. 43 --------------------------------------------------------------------------------
Critical Factors Affecting Results
Our outcomes rely on, amongst different issues, the appropriateness of our product pricing, underwriting, the accuracy of our reserving methodology for future policyholder advantages and claims, the frequency and severity of reportable and non-reportable catastrophes, returns on and values of invested property, our funding earnings and our skill to handle our bills and obtain expense financial savings. Our outcomes additionally rely on our skill to profitably develop all of our companies, together with our Connected Living,Multifamily Housing andGlobal Automotive companies, and keep our place in ourLender-placed Insurance enterprise. Factors affecting this stuff, together with situations in monetary markets, the worldwide economic system and the markets through which we function, fluctuations in trade charges, rates of interest and inflation, together with the present interval of inflationary pressures, could have a fabric opposed impact on our outcomes of operations or monetary situation. For extra info on these and different elements that might have an effect on our outcomes, see "Item 1A - Risk Factors." Our outcomes might also be impacted by our skill to proceed to develop within the markets through which we function, together with in our Connected Living,Multifamily Housing andGlobal Automotive companies, which will probably be impacted by our skill to offer a superior digital-first buyer expertise, together with from our investments in expertise and digital initiatives, and capitalize on the good house alternative. Our cell enterprise is topic to volatility in cell system commerce-in volumes based mostly on the precise and anticipated timing of the discharge of new units and service promotional applications, in addition to to adjustments in client preferences. OurLender-placed Insurance revenues will probably be impacted by adjustments in the housing market. In addition, throughout many of our companies, we should reply to the risk of disruption and the competitors for expertise. See "Item 1A - Risk Factors - Business, Strategic and Operational Risks - Significant aggressive pressures, adjustments in buyer preferences and disruption may adversely have an effect on our outcomes of operations" and " - The success of our enterprise depends upon the execution of our technique, together with by way of the persevering with service of key executives, senior leaders, extremely-expert personnel and a excessive-performing workforce." For Twelve Months 2021, web money supplied by working actions from persevering with operations was$630.5 million ; web money supplied by investing actions from persevering with operations was$302.8 million ; and web money utilized in financing actions from persevering with operations was$1.09 billion . We had$2.04 billion in money and money equivalents as ofDecember 31, 2021 . Please see " - Liquidity and Capital Resources" beneath for additional particulars.
Revenues
We generate revenues primarily from the sale of our insurance coverage insurance policies, service contracts and associated merchandise and providers and from earnings earned on our investments. Sales of insurance coverage insurance policies are acknowledged in income as earned premiums whereas gross sales of administrative providers are acknowledged as charge earnings. Our premium and charge earnings is supplemented by earnings earned from our funding portfolio. We acknowledge income from curiosity funds, dividends, change in market worth of fairness securities and gross sales of investments. Currently, our funding portfolio is primarily invested in fastened maturity securities. Both funding earnings and adjustments in market worth on these investments could be considerably affected by adjustments in rates of interest. Interest fee volatility can enhance or cut back unrealized good points or losses in our funding portfolios. Interest charges are extremely delicate to many elements, together with governmental financial insurance policies, home and worldwide financial and political situations, inflation and different elements past our management. Fluctuations in rates of interest have an effect on our returns on, and the market worth of, fastened maturity and brief-time period investments. The truthful market worth of the fastened maturity securities in our funding portfolio and the funding earnings from these securities fluctuate relying on normal financial and market situations. The truthful market worth typically will increase or decreases in an inverse relationship with fluctuations in curiosity charges, whereas web funding earnings realized by us from future investments in fastened maturity securities will typically enhance or lower with curiosity charges. We even have investments which might be topic to pre-cost danger, resembling mortgage-backed and asset-backed securities. Interest fee fluctuations could trigger precise web funding earnings and/or timing of money flows from such investments to vary from estimates made on the time of funding. In intervals of declining rates of interest, mortgage prepayments typically enhance and mortgage-backed securities, business mortgage obligations and bonds are extra more likely to be pay as you go or redeemed as debtors search to borrow at decrease curiosity charges. Therefore, in these circumstances we could also be required to reinvest these funds in decrease curiosity-incomes investments.
Expenses
Our bills are primarily policyholder advantages, underwriting, normal and
administrative bills and curiosity expense.
Policyholder advantages are affected by our claims administration applications, reinsurance protection, contractual phrases and situations, regulatory necessities, financial situations, and quite a few different elements. Benefits paid or reserves required for future advantages may considerably exceed our expectations, inflicting a fabric opposed impact on our enterprise, outcomes of operations and monetary situation. 44 --------------------------------------------------------------------------------
Underwriting, normal and administrative bills consist primarily of
commissions, premium taxes, licenses, charges, amortization of deferred prices,
normal working bills and earnings taxes. We proceed to undertake numerous
expense financial savings initiatives whereas additionally making investments in expertise,
capabilities and expertise, amongst different issues, which is able to affect our bills.
We additionally incur curiosity expense associated to our debt.
Critical Accounting Policies and Estimates
Certain gadgets in our Consolidated Financial Statements are based mostly on estimates
and judgment. Differences between precise outcomes and these estimates and
judgments may in some circumstances have materials impacts on our Consolidated
Financial Statements. The following crucial accounting insurance policies require
important estimates and judgment:
•Reserves, Net of Reinsurance
•Valuation of Investments, together with Evaluation of Credit Losses
•Valuation and Recoverability of
Reserves, Net of Reinsurance
Reserves are established utilizing typically accepted actuarial strategies and replicate judgments about anticipated future declare funds. Factors used of their calculation embody expertise derived from historic declare funds and actuarial assumptions. Calculations incorporate assumptions in regards to the incidence of incurred claims, the extent to which all claims have been reported, reporting lags, bills, inflation charges, future funding earnings, inner claims processing prices and different related elements. While the strategies of making such estimates and establishing the associated liabilities are periodically reviewed and up to date, the estimation of reserves consists of a component of uncertainty given that administration is utilizing historic info and strategies to mission future occasions and reserve outcomes. The recorded reserves characterize our greatest estimate at a time limit of the final prices of settlement and administration of a declare or group of claims, based mostly upon actuarial assumptions and projections utilizing info and circumstances identified on the time of calculation. The adequacy of reserves could also be impacted by future tendencies in claims severity, frequency, judicial theories of legal responsibility and different elements. These variables are affected by each exterior and inner occasions, together with: adjustments within the financial cycle, inflation, adjustments in restore prices, pure or human-made catastrophes, judicial tendencies, legislative adjustments and claims dealing with procedures. Many of this stuff aren't straight quantifiable and not all future occasions can be anticipated when reserves are established. Reserve estimates are refined as expertise develops. Adjustments to reserves, each constructive and unfavorable, are mirrored within the consolidated assertion of operations within the interval through which such estimates are up to date. Because institution of reserves is an inherently advanced course of involving important judgment and estimates, there could be no certainty that future settlement quantities for claims incurred by way of the monetary reporting date will not differ from reported claims reserves. Future loss growth may require reserves to be elevated or decreased, which may have a fabric impact on our earnings within the intervals through which such will increase or decreases are made. However, based mostly on info presently obtainable, we consider our reserve estimates are enough. See "Item 1A - Risk Factors - Financial Risks - Our precise claims losses could exceed our reserves for claims, requiring us to ascertain further reserves or to incur further expense for settling unreserved liabilities, which may have a fabric opposed impact on our outcomes of operations, profitability and capital" and " - Financial Risks - Actual outcomes could differ materially from the analytical fashions we use to help in our resolution-making in key areas resembling pricing, disaster dangers, reserving and capital administration" for extra element on this danger. Reinsurance Recoverables We make the most of reinsurance for loss safety and capital administration, enterprise tendencies and shopper danger and revenue sharing. Reinsurance premiums paid are amortized as reductions to premium over the phrases of the underlying reinsured insurance policies. Amounts recoverable from reinsurers are estimated in a way in line with declare and declare adjustment expense reserves or future coverage advantages reserves. Reinsurance recoverables embody quantities we're owed by reinsurers for claims paid in addition to these included in reserve estimates that are topic to the reinsurance. We use a chance of default and loss given default methodology in estimating an anticipated credit score loss allowance, whereby the credit score scores of reinsurers are utilized in figuring out the chance of default. The allowance is established for reinsurance recoverables on paid and unpaid future coverage advantages and claims and advantages. Prior to making use of default elements, the online publicity to credit score danger is decreased for any collateral for which the proper of offset exists, resembling funds withheld, property held in 45 -------------------------------------------------------------------------------- belief and letters of credit score, that are half of the reinsurance preparations, with changes to incorporate consideration of credit score publicity on the collateral. Our methodology incorporates historic default elements for every reinsurer based mostly on their credit standing utilizing comparably rated bonds as printed by a serious scores service. The allowance is predicated upon our ongoing evaluate of quantities excellent, size of assortment intervals, adjustments in reinsurer credit score standing and different related elements. In the atypical course of enterprise, we're concerned in each the idea and cession of reinsurance with non-affiliated corporations. The following desk gives particulars of the reinsurance recoverables steadiness as ofDecember 31, 2021 and 2020: 2021 2020
Ceded future policyholder advantages and expense
Ceded unearned premium
4,950.0 4,565.4 Ceded claims and advantages payable 821.8 846.2 Ceded paid losses 68.7 60.0 Total$ 6,178.9 $ 6,605.4
For further info relating to our reserves and reinsurance recoverables,
see Notes 2, 5, 17 and 18 to the Consolidated Financial Statements included
elsewhere on this Report.
Short Duration Contracts
Claims and advantages payable reserves for brief period contracts embody (1) case reserves for identified claims that are unpaid as of the steadiness sheet date; (2) IBNR reserves for claims the place the insured occasion has occurred however has not been reported to us as of the steadiness sheet date; and (3) loss adjustment expense reserves for the anticipated dealing with prices of settling the claims. Periodically, we evaluate rising expertise and make changes to our reserves and assumptions the place vital. Ultimate loss and loss adjustment bills are estimated using typically accepted actuarial loss reserving strategies. Both paid claims growth as effectively as case incurred growth are usually analyzed on the product or product grouping stage, contemplating product dimension and knowledge credibility. The reserving strategies broadly employed by us embody the Chain Ladder, Munich Chain Ladder and Bornhuetter-Ferguson strategies. ForGlobal Housing , reportable catastrophes are analyzed and reserved for individually utilizing a frequency and severity method. The strategies all contain aggregating paid and case-incurred loss knowledge accidentally quarter (or accident 12 months) and accident age for every product grouping. As the knowledge ages, growth elements are calculated that measure rising declare growth patterns between reporting intervals. By choosing loss growth elements indicative of remaining growth, identified losses are projected to an final incurred foundation for every accident interval. The underlying premise of the Chain Ladder methodology is that future claims growth is finest estimated utilizing previous claims growth, whereas the Bornhuetter-Ferguson methodology employs a mixture of previous claims growth and prior estimates of final losses based mostly on an anticipated loss ratio. The Munich Chain Ladder methodology incorporates the correlations between paid and incurred growth in projecting future growth elements, and is usually extra relevant to merchandise experiencing variability in incurred to paid ratios. Each of these strategies utilized to the info groupings produces an estimate of the loss reserves for the product grouping. The finest estimate is usually chosen from a mix of the completely different strategies. The IBNR related to the most effective estimate is then allotted to accident 12 months based mostly on a weighting of the underlying actuarial strategies. The willpower of the most effective estimate is predicated on many elements, together with:
•the character and extent of the underlying assumptions;
•the standard and applicability of historic knowledge – whether or not inner or trade
knowledge;
•present and anticipated future financial and market situations;
•regulatory, legislative, and judicial concerns;
•the extent of knowledge segmentation – knowledge ought to be homogeneous but credible
sufficient for loss growth strategies to use;
•tendencies in loss frequency and severity for numerous causes of loss;
•consideration of the distribution of loss reserves, administration's choice of the most effective estimate which will exceed an estimate based mostly on median values, suggesting that favorable growth could also be extra possible than unfavorable growth; and
•hindsight testing of prior loss estimates – the loss estimates on some product
traces will differ from precise loss expertise greater than others.
46 -------------------------------------------------------------------------------- When using the reserving strategies, consideration is given to contractual necessities, historic utilization tendencies and cost patterns, protection adjustments, seasonality, product combine, the legislative and regulatory setting, financial elements, pure catastrophes and different related elements. We persistently apply reserving ideas and methodologies from 12 months to 12 months, whereas additionally giving due consideration to the potential variability of these elements. While administration has used judgment in establishing its finest estimate of required reserves, completely different assumptions and variables may result in considerably completely different reserve estimates. Two key measures of loss exercise are loss frequency, which is a measure of the quantity of claims per unit of insured publicity, and loss severity, which is a measure of the typical dimension of claims. Factors affecting loss frequency embody the effectiveness of loss controls, adjustments in financial exercise and climate patterns. Factors affecting loss severity embody adjustments in coverage limits, retentions, fee of inflation and judicial interpretations. If the precise stage of loss frequency and severity are greater or decrease than anticipated, the last word reserves required will probably be completely different than administration's estimate. The impact of greater and decrease ranges of loss frequency and severity on our final prices for claims occurring in 2021 can be as follows: Change in each loss frequency and severity Ultimate value of claims Change in value of claims for all Global Lifestyle and Global Housing occurring in 2021 occurring in 2021 3% greater $ 1,354.0 $ 77.5 2% greater $ 1,328.0 $ 51.5 1% greater $ 1,302.0 $ 25.5 Base situation (1) $ 1,276.5 $ - 1% decrease $ 1,251.0 $ (25.5) 2% decrease $ 1,225.0 $ (51.5) 3% decrease $ 1,199.0 $ (77.5)
(1)Represents the sum of the case reserves and incurred however not reported
reserves as of
Long Duration Contracts, together with Disposed and Runoff Long Duration Lines
Reserves for future coverage advantages characterize the current worth of future advantages to policyholders and associated bills much less the current worth of future web premiums. Reserve assumptions replicate finest estimates for anticipated funding yield, inflation, mortality, morbidity, bills and withdrawal charges. These assumptions are based mostly on our expertise to the extent it's credible, modified the place applicable to replicate present tendencies, trade expertise and provisions for potential unfavorable deviation. We additionally report an unearned income reserve which represents premiums obtained which haven't but been acknowledged in our consolidated statements of operations. Risks associated to the reserves recorded for sure discontinued particular person life, annuity and lengthy-time period care insurance coverage insurance policies have been absolutely ceded by way of reinsurance. While now we have not been launched from our contractual obligation to the policyholders, adjustments in and deviations from financial, mortality, morbidity, and withdrawal assumptions used within the calculation of these reserves won't straight have an effect on our outcomes of operations except there's a default by the assuming reinsurer. Valuation of Investments In figuring out the estimated truthful worth of our investments, truthful values are based totally on unadjusted quoted costs for equivalent investments in energetic markets which might be readily and recurrently obtainable. When such unadjusted quoted costs aren't obtainable, estimated truthful values are based mostly on quoted costs for equivalent or comparable investments in markets that aren't energetic, or different observable inputs. If these observable inputs aren't obtainable, or observable inputs aren't determinable, unobservable inputs or changes to observable inputs requiring administration judgment are used to find out the estimated truthful worth of investments. The methodologies, assumptions and inputs utilized are described in Note 10 to the Consolidated Financial Statements. Financial markets are prone to extreme occasions evidenced by speedy depreciation in asset values accompanied by a discount in asset liquidity. Our skill to promote investments and the worth finally realized for investments relies upon upon the demand and liquidity out there.
See additionally Notes 2 and 8 to the Consolidated Financial Statements included
elsewhere on this Report, “Item 1A – Risk Factors – Financial Risks – Our
investment portfolio is subject to market risk, including changes in interest
rates, that may adversely affect our results of operations and financial
condition” and ” – Investments” contained on this Item 7.
47 --------------------------------------------------------------------------------
Valuation and Recoverability of
Our goodwill associated to acquisitions of companies was$2.57 billion and$2.59 billion as ofDecember 31, 2021 and 2020, respectively. We evaluate our goodwill yearly within the fourth quarter for impairment, or extra regularly if indicators of impairment exist. Such indicators embody: a big opposed change in authorized elements, an opposed motion or evaluation by a regulator, unanticipated competitors, loss of key personnel or a big decline in our anticipated future money flows on account of adjustments in firm-particular elements or the broader enterprise local weather. The analysis of such elements requires appreciable administration judgment. Any opposed change in these elements may have a important affect on the recoverability of goodwill and may have a fabric affect on our Consolidated Financial Statements.Goodwill is examined for impairment on the reporting unit stage, which is both on the working phase or one stage beneath, if that part is a enterprise for which discrete monetary info is offered and phase administration recurrently evaluations such info. Components inside an working phase can be aggregated into one reporting unit if they've comparable financial traits. A goodwill impairment loss is measured as the surplus of the carrying worth, together with goodwill, of the reporting unit over its truthful worth. An impairment loss is proscribed to the quantity of goodwill allotted to the reporting unit.
Our Global Lifestyle working phase is disaggregated into the next three
reporting items: Connected Living,
Services
stage because the working phase for
The following desk illustrates the quantity of goodwill carried by working
phase as of the dates indicated:
December 31, 2021 2020 Global Lifestyle (1)$ 2,192.1 $ 2,209.8 Global Housing 379.5 379.5 Total$ 2,571.6 $ 2,589.3 (1) As ofDecember 31, 2021 ,$698.7 million ,$1,420.5 million and$72.9 million of goodwill was assigned to the Connected Living,Global Automotive andGlobal Financial Services and Other reporting unit, respectively. As ofDecember 31, 2020 ,$715.2 million ,$1,421.3 million , and$73.3 million of goodwill was assigned to the Connected Living,Global Automotive andGlobal Financial Services and Other reporting unit, respectively.
Quantitative Impairment Testing
In the fourth quarter of 2021, we carried out a quantitative evaluation for the Global Lifestyle andGlobal Housing reporting items given the uncertainty in macro-financial situations and the general trade efficiency on account of extended COVID-19 impacts. Based on this quantitative evaluation, the Company decided that it was extra possible than not that the reporting items' truthful values have been extra than their carrying quantities and that there was no impairment for the Global Lifestyle andGlobal Housing reporting items as ofOctober 1, 2021 . The willpower of truthful worth of the reporting items requires many estimates and assumptions. These estimates and assumptions embody earnings and required capital projections mentioned above, low cost charges, terminal progress charges, working earnings and dividend forecasts for every reporting unit and the weighting assigned to the outcomes of every of the three valuation strategies described above. Changes in sure assumptions may have a big affect on the goodwill impairment evaluation. Should the working outcomes of these reporting items decline considerably in comparison with projected outcomes, or ought to additional rate of interest declines enhance the online unrealized funding portfolio achieve place, we may decide that we have to carry out an up to date impairment check as a result of potential impairment indicators, which can require the popularity of a goodwill impairment loss in any of the reporting items. For the fourth quarter of 2021 quantitative evaluation, had the online e-book worth for any of the reporting items exceeded its estimated truthful worth, the Company would have acknowledged a goodwill impairment loss for the distinction as much as the quantity of goodwill allotted to the reporting unit.
Refer to Note 15 to the Consolidated Financial Statements included elsewhere in
this Report for additional element.
Recent Accounting Pronouncements
Please see Note 2 to the Consolidated Financial Statements included elsewhere in
this Report.
48 --------------------------------------------------------------------------------
Results of Operations Assurant Consolidated Overview
The desk beneath presents info relating to our consolidated outcomes of
operations:
For
the Years Ended
2021 2020 2019 Revenues: Net earned premiums$ 8,572.1 $ 8,275.8 $ 7,958.8 Fees and different earnings 1,172.9 1,042.3 1,170.1 Net funding earnings 314.4 285.6 383.2 Net realized good points (losses) on investments and truthful worth adjustments to fairness securities 128.2 (8.2) 57.0 Total revenues 10,187.6 9,595.5 9,569.1 Benefits, losses and bills: Policyholder advantages 2,195.7 2,264.9 2,385.7
Amortization of deferred acquisition prices and worth of
enterprise acquired
3,835.8 3,591.5 3,237.2 Underwriting, normal and administrative bills 3,240.6 3,047.9 3,186.5 Iké web losses - 5.9 163.0 Interest expense 111.8 104.5 110.6 Loss on extinguishment of debt 20.7 - 31.4 Total advantages, losses and bills 9,404.6 9,014.7 9,114.4 Income earlier than provision for earnings taxes 783.0 580.8 454.7 Provision for earnings taxes 169.5 60.4 148.3 Net earnings from persevering with operations 613.5 520.4 306.4 Net earnings (loss) from discontinued operations 758.9 (77.7) 80.4 Net earnings 1,372.4 442.7 386.8 Less: Net earnings attributable to non-controlling curiosity - (0.9) (4.2) Net earnings attributable to stockholders 1,372.4 441.8 382.6 Less: Preferred inventory dividends (4.7) (18.7) (18.7) Net earnings attributable to frequent stockholders$ 1,367.7
Year Ended
Net Income from Continuing Operations
Consolidated web earnings from persevering with operations elevated$93.1 million , or 18%, to$613.5 million for Twelve Months 2021 from$520.4 million for Twelve Months 2020, primarily on account of greater web realized good points on investments and truthful worth adjustments to fairness securities in comparison with web losses within the prior interval, together with$67.5 million of after-tax unrealized good points from 4 fairness positions that went public throughout Twelve Months 2021, the absence of$25.5 million of after-tax web unrealized losses on collateralized mortgage obligations in Twelve Months 2020 and$19.2 million of after-tax unrealized good points from fairness securities accounted for below the measurement various. The enhance was additionally on account of favorable earnings contributions from Global Lifestyle, primarily due to continued natural progress and favorable loss expertise inGlobal Automotive . These will increase have been partially offset by the absence of an$84.4 million tax profit that was recorded in Twelve Months 2020 associated to the utilization of web working losses in reference to the CARES Act.
Year Ended
Net Income from Continuing Operations
Consolidated web earnings from persevering with operations elevated$214.0 million , or 70%, to$520.4 million for Twelve Months 2020 from$306.4 million for Twelve Months 2019. Net earnings for Twelve Months 2020 included$137.2 million of reportable catastrophes, on account of a number of storms in 2020 together with Hurricane Laura, in comparison with$41.0 million in Twelve Months 49 -------------------------------------------------------------------------------- 2019. Excluding reportable catastrophes, web earnings elevated$310.2 million , or 89%, on account of$154.6 million of decrease after-tax losses from decreases within the estimated truthful worth of Iké Grupo, Iké Asistencia and sure of their associates (collectively, "Iké"), an$84.4 million tax profit associated to the utilization of web working losses in reference to the CARES Act and an enchancment in our outcomes fromGlobal Housing and Global Lifestyle. The enhance was additionally as a result of absence of$29.6 million of after-tax debt associated expenses from Twelve Months 2019. These will increase have been partially offset by a$55.8 million after-tax lower in web realized good points on investments and truthful worth adjustments to fairness securities largely on account of a lower in web unrealized good points on fairness securities and greater unrealized losses from the lower in truthful worth of collateralized mortgage obligations, in addition to$21.2 million of after-tax direct and incremental working bills incurred in reference to the COVID-19 pandemic. 50
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Global Lifestyle
Overview
The desk beneath presents info relating to the Global Lifestyle phase’s
outcomes of operations for the intervals indicated:
For
the Years Ended
2021 2020 2019 Revenues: Net earned premiums$ 6,720.3 $ 6,442.2 $ 6,073.7 Fees and different earnings 1,027.4 895.4 1,020.5 Net funding earnings 201.3 194.3 250.8 Total revenues 7,949.0 7,531.9 7,345.0 Benefits, losses and bills: Policyholder advantages 1,333.1 1,412.6 1,516.2
Amortization of deferred acquisition prices and worth of
enterprise acquired
3,602.2 3,365.9 3,015.7 Underwriting, normal and administrative bills 2,398.5 2,189.1 2,277.6 Total advantages, losses and bills 7,333.8 6,967.6 6,809.5 Segment earnings earlier than provision for earnings taxes 615.2 564.3 535.5 Provision for earnings taxes 130.5 127.1 126.2 Segment web earnings$ 484.7 $ 437.2 $ 409.3 Net earned premiums, charges and different earnings: Connected Living$ 3,915.8 $ 3,836.6 $ 3,768.4 Global Automotive 3,436.9 3,113.0 2,873.6 Global Financial Services and Other 395.0 388.0 452.2 Total$ 7,747.7 $ 7,337.6 $ 7,094.2 Net earned premiums, charges and different earnings: Domestic$ 5,879.1 $ 5,408.3 $ 5,020.1 International 1,868.6 1,929.3 2,074.1 Total$ 7,747.7 $ 7,337.6 $ 7,094.2
Year Ended
Net Income
Segment web earnings elevated$47.5 million , or 11%, to$484.7 million for Twelve Months 2021 from$437.2 million for Twelve Months 2020, primarily on account ofGlobal Automotive from underlying progress from prior interval gross sales pushed by expanded and new shopper relationships globally, favorable loss expertise in choose ancillary merchandise and$8.2 million of one-time advantages in Twelve Months 2021 which might be not anticipated to repeat. Connected Living andGlobal Financial Services and Other additionally contributed to the rise. Connected Living progress was led by cell, primarily from greater cell commerce-in volumes, together with Hyla, higher efficiency inAsia Pacific and further home cell subscribers throughout service and cable operator purchasers. This enhance was partially offset by investments to construct out service and restore capabilities and a$6.7 million after-tax profit for an prolonged service contract shopper recoverable in Twelve Months 2020. Growth inGlobal Financial Services and Other was primarily on account of claims and gross sales recoveries as Twelve Months 2020 included unfavorable impacts associated to COVID-19.
Total Revenues
Total revenues elevated$417.1 million , or 6%, to$7.95 billion for Twelve Months 2021 from$7.53 billion for Twelve Months 2020. Net earned premiums elevated$278.1 million , or 4%, primarily pushed by continued progress from robustU.S. gross sales in ourGlobal Automotive enterprise throughout all distribution channels. The enhance in web earned premiums was partially offset by modest declines in Connected Living, because the run-off of sure international cell applications was offset by progress in prolonged service contract applications and home cell subscribers inside our cable operator distribution channel. Fees and different earnings elevated$132.0 million , or 15%, pushed by Connected Living from greater cell restore and logistics volumes 51 -------------------------------------------------------------------------------- primarily from HYLA contributions and cell service promotions, partially offset by the$176 million discount from the beforehand disclosed program contract change. Net funding earnings elevated$7.0 million , or 4%, primarily on account of greater earnings from actual property associated investments.
Total Benefits, Losses and Expenses
Total advantages, losses and bills elevated$366.2 million , or 5%, to$7.33 billion for Twelve Months 2021 from$6.97 billion for Twelve Months 2020. Amortization of deferred acquisition prices and worth of enterprise acquired elevated$236.3 million , or 7%, primarily on account of a rise in amortization of deferred acquisition prices ("DAC") on account of progress in ourGlobal Automotive enterprise and prolonged service contract applications inside our Connected Living enterprise, partially offset by a lower in amortization of VOBA associated to the acquisition ofTWG Holdings Limited and its subsidiaries. Underwriting, normal and administrative bills elevated$209.4 million , or 10%, primarily on account of progress throughout the companies, together with greater cell restore and logistics volumes, with contributions from HYLA, and investments to construct out service and restore capabilities, partially offset by the affect of the beforehand disclosed program contract change. The enhance in complete advantages, losses and bills was partially offset by a$79.5 million , or 6%, lower in policyholder advantages, primarily as a result of run-off of sure international cell applications in our Connected Living enterprise and decrease loss expertise in choose ancillary merchandise inGlobal Automotive , partially offset by progress throughout ourGlobal Automotive and Connected Living companies.
Year Ended
Net Income
Segment web earnings elevated$27.9 million , or 7%, to$437.2 million for Twelve Months 2020 from$409.3 million for Twelve Months 2019, primarily pushed by our Connected Living enterprise, primarily on account of continued cell subscriber progress inNorth America andAsia Pacific and improved prolonged service contract loss expertise, in addition to greater earnings and natural progress from ourGlobal Automotive enterprise. These will increase have been partially offset by decrease funding earnings and unfavorable overseas trade. Additionally, ourGlobal Financial Services and Other enterprise had decrease earnings, primarily on account of decrease volumes and greater loss expertise, primarily ensuing from the COVID-19 pandemic, and anticipated declines from home enterprise in run-off.
Total Revenues
Total revenues elevated$186.9 million , or 3%, to$7.53 billion for Twelve Months 2020 from$7.35 billion for Twelve Months 2019. Net earned premiums elevated$368.5 million , or 6%, primarily pushed by continued progress from prior interval manufacturing in ourGlobal Automotive enterprise and progress in our Connected Living enterprise, primarily on account of progress in home prolonged service contract applications and continued subscriber progress from cell safety applications. These will increase in web earned premiums have been partially offset by unfavorable overseas trade and a lower in ourGlobal Financial Services and Other enterprise, primarily on account of home enterprise in run-off. Fees and different earnings decreased$125.1 million , or 12%, primarily pushed by decrease cell commerce-in outcomes, primarily on account of a$117.0 million affect ensuing from the beforehand talked about cell program contract change. Net funding earnings decreased$56.5 million , or 23%, primarily on account of decrease money yields, decrease invested asset balances, decrease earnings from actual property and unfavorable overseas trade.
Total Benefits, Losses and Expenses
Total advantages, losses and bills elevated$158.1 million , or 2%, to$6.97 billion for Twelve Months 2020 from$6.81 billion for Twelve Months 2019. Amortization of deferred acquisition prices and worth of enterprise acquired elevated$350.2 million , or 12%, primarily on account of progress from ourGlobal Automotive and Connected Living companies. This enhance was partially offset by a lower in policyholder advantages of$103.6 million , or 7%, primarily pushed by a good combine of cell enterprise, decrease loss expertise inside our Connected Living andGlobal Automotive companies, partly on account of COVID-19, partially offset by a rise from progress in these companies. Underwriting, normal and administrative bills decreased$88.5 million , or 4%, primarily on account of a cell program contract change, as talked about above, favorable overseas trade and expense initiatives throughout the phase, partially offset by an enhance from progress in ourGlobal Automotive and Connected Living companies, together with new acquisitions. 52 --------------------------------------------------------------------------------
Overview
The desk beneath presents info relating to the
outcomes of operations for the intervals indicated:
For
the Years Ended
2021 2020 2019 Revenues: Net earned premiums$ 1,851.8 $ 1,833.6 $ 1,885.1 Fees and different earnings 144.8 143.7 148.6 Net funding earnings 81.0 72.8 95.2 Total revenues 2,077.6 2,050.1 2,128.9 Benefits, losses and bills: Policyholder advantages 862.6 852.1 869.5
Amortization of deferred acquisition prices and worth of
enterprise acquired
233.6 225.6 221.5 Underwriting, normal and administrative bills 671.4 677.3 711.6 Total advantages, losses and bills 1,767.6 1,755.0 1,802.6 Segment earnings earlier than provision for earnings taxes 310.0 295.1 326.3 Provision for earnings taxes 65.4 61.3 67.6 Segment web earnings$ 244.6 $ 233.8 $ 258.7 Net earned premiums, charges and different earnings: Lender-placed Insurance$ 1,065.9 $ 1,052.5 $ 1,109.2 Multifamily Housing 482.3 451.6 429.2 Specialty and Other 448.4 473.2 495.3 Total$ 1,996.6 $ 1,977.3 $ 2,033.7
Year Ended
Net Income
Segment web earnings elevated$10.8 million , or 5%, to$244.6 million for Twelve Months 2021 in comparison with$233.8 million for Twelve Months 2020. Segment web earnings for Twelve Months 2021 included$113.9 million of reportable catastrophes, primarily associated to Hurricane Ida and theTexas winter storms, in comparison with$137.2 million for Twelve Months 2020. Excluding reportable catastrophes, phase web earnings decreased$12.5 million , or 3%, pushed by greater non-disaster loss expertise from an anticipated enhance to extra normalized ranges than skilled in Twelve Months 2020 and a$12.3 million 12 months-over-12 months enhance inside small business that was primarily associated to reserve strengthening for run-off claims, in addition to decrease REO volumes associated to COVID-19 foreclosures moratoriums inLender-placed Insurance . These decreases have been partially offset by premium fee and common insured worth will increase in ourLender-placed Insurance enterprise.
Total Revenues
Total revenues elevated$27.5 million , or 1%, to$2.08 billion for Twelve Months 2021 from$2.05 billion for Twelve Months 2020. Net earned premiums elevated$18.2 million , or 1%, primarily on account of common insured worth and premium fee will increase in ourLender-placed Insurance enterprise and continued progress from renters insurance coverage in ourMultifamily Housing enterprise. These will increase have been partially offset by a decline in Specialty and Other from shopper run-offs, decrease REO volumes, greater estimated disaster premium and greater reinsurance reinstatement premium primarily associated to Hurricane Ida. Net funding earnings elevated$8.2 million , or 11%, primarily on account of greater earnings from actual property associated investments.
Total Benefits, Losses and Expenses
Total advantages, losses and bills elevated$12.6 million , or 1%, to$1.77 billion for Twelve Months 2021 from$1.76 billion for Twelve Months 2020. The enhance was primarily on account of a rise in policyholder advantages of$10.5 million , or 1%, from greater non-disaster losses, primarily inLender-placed Insurance and, to a lesser extent, Specialty and Other andMultifamily Housing , from an anticipated enhance to extra normalized ranges than skilled in Twelve Months 2020 in addition to a rise in reserves associated to the price of settling run-off claims inside our small business product, partially offset by a lower in reportable disaster losses. Amortization of DAC and VOBA elevated$8.0 million , or 4%, in line with the 53 --------------------------------------------------------------------------------
enhance in web earned premium. Underwriting, normal and administrative
bills decreased
fee expense in our Specialty and Other enterprise, partially offset by an
enhance in bills from progress and continued investments in
Housing
Year Ended
Net Income
Segment web earnings decreased$24.9 million , or 10%, to$233.8 million for Twelve Months 2020 from$258.7 million for Twelve Months 2019. Segment web earnings for Twelve Months 2020 included$137.2 million of reportable catastrophes, on account of a number of storms in 2020, in comparison with$40.9 million in Twelve Months 2019. Excluding reportable catastrophes, phase web earnings elevated$71.4 million , or 24%, primarily pushed by favorable non-disaster losses throughout all main traces of companies, together with underwriting enhancements in sharing economic system choices. The enhance was additionally pushed by greater premium charges in ourLender-placed Insurance enterprise, the absence of losses from our small business product and decrease working bills in ourLender-placed Insurance enterprise. The enhance was partially offset by decrease REO quantity and charge earnings in ourLender-placed Insurance enterprise, fewer insurance policies in-drive from a financially bancrupt shopper and decrease funding earnings.
Total Revenues
Total revenues decreased$78.8 million , or 4%, to$2.05 billion for Twelve Months 2020 from$2.13 billion for Twelve Months 2019. Net earned premiums decreased$51.5 million , or 3%, primarily on account of declines in ourLender-placed Insurance enterprise, declines in our small business enterprise, a discount in insurance policies in-drive for a financially bancrupt shopper and decrease REO quantity. This lower was partially offset by premium fee will increase in ourLender-placed Insurance enterprise, continued progress from renters insurance coverage in ourMultifamily Housing enterprise and progress from our Specialty and Other enterprise, primarily sharing economic system merchandise. Net funding earnings decreased$22.4 million , or 24%, primarily on account of decrease earnings from actual property associated investments, decrease money yields and a lower in invested property. Fees and different earnings decreased$4.9 million , or 3%, primarily on account of a decline in ourLender-placed Insurance enterprise, largely on account of decrease loss draft quantity.
Total Benefits, Losses and Expenses
Total advantages, losses and bills decreased$47.6 million , or 3%, to$1.76 billion for Twelve Months 2020 from$1.80 billion for Twelve Months 2019. The lower was primarily on account of a lower of$34.3 million , or 5%, in underwriting, normal and administrative bills, primarily on account of decrease employment associated bills in ourLender-placed Insurance enterprise. Policyholder advantages decreased$17.4 million , or 2%, primarily from decrease non-disaster losses throughout all main traces of companies and the absence of losses from our small business product, partially offset by greater reportable disaster losses. 54
--------------------------------------------------------------------------------
Corporate and Other
Overview
The desk beneath presents info relating to the Corporate and Other phase’s
outcomes of operations for the intervals indicated:
For the
Years Ended
2021 2020 2019 Revenues: Fees and different earnings$ 0.7 $ 3.2 $ 1.0 Net funding earnings 32.1 18.5 37.2
Net realized good points (losses) on investments and truthful
worth adjustments to fairness securities
128.2 (8.2) 57.0 Total revenues 161.0 13.5 95.2 Benefits, losses and bills: Policyholder advantages - 0.2 - General and administrative bills 170.7 181.5 197.3 Iké web losses - 5.9 163.0 Interest expense 111.8 104.5 110.6 Loss on extinguishment of debt 20.7 - 31.4 Total advantages, losses and bills 303.2 292.1 502.3 Segment loss earlier than profit for earnings taxes (142.2) (278.6) (407.1) Benefit for earnings taxes (26.4) (128.0) (45.5) Segment web loss from persevering with operations$ (115.8)
Year Ended
Net Loss from Continuing Operations
Segment web loss from persevering with operations decreased$34.8 million , or 23%, to$115.8 million for Twelve Months 2021 from$150.6 million for Twelve Months 2020, primarily on account of a$110.0 million after-tax enhance in web realized good points on investments and truthful worth adjustments to fairness securities in comparison with web losses within the prior 12 months, together with$67.5 million of after-tax unrealized good points from 4 fairness positions that went public throughout Twelve Months 2021, the absence of$25.5 million of after-tax unrealized losses on collateralized loss obligations in Twelve Months 2020 and$19.2 million of after-tax unrealized good points from fairness securities accounted for below the measurement various. The lower in web loss was additionally pushed by decrease normal working bills, which included a$13.2 million lower in after-tax direct and incremental bills incurred in reference to the COVID-19 pandemic, and a rise in web funding earnings. These gadgets have been partially offset by the absence of an$84.4 million tax profit associated to the utilization of web working losses in reference to the CARES Act from Twelve Months 2020, a$16.3 million after-tax loss on extinguishment of debt and the absence of an$11.8 million achieve associated to the discount of the valuation allowance on our Patient Protection and Affordable Health Care Act of 2010 ("ACA") danger hall program receivable.
Total Revenues
Total revenues elevated$147.5 million to$161.0 million for Twelve Months 2021 from$13.5 million for Twelve Months 2020, primarily pushed by an$136.4 million enhance in web realized good points on investments and truthful worth adjustments to fairness securities in comparison with web losses within the prior 12 months, together with$85.4 million of unrealized good points from 4 fairness positions that went public throughout Twelve Months 2021, the absence of$32.3 million of unrealized losses on collateralized loss obligations in Twelve Months 2020 and$24.3 million of unrealized good points from fairness securities accounted for below the measurement various. The enhance can also be on account of$13.6 million of greater web funding earnings, largely pushed by good points from the sale of actual property three way partnership properties and greater earnings from restricted partnerships. 55 --------------------------------------------------------------------------------
Total Benefits, Losses and Expenses
Total advantages, losses and bills elevated$11.1 million , or 4%, to$303.2 million for Twelve Months 2021 from$292.1 million for Twelve Months 2020, primarily as a result of$20.7 million loss on extinguishment of debt, the absence of sure good points from Twelve Months 2020 that included a$14.8 million achieve associated to the discount of the valuation allowance of our ACA danger hall program receivable and$10.8 million of earnings, web of sure exit prices from the sale of our CLO asset administration platform. These will increase have been partially offset by$17.3 million of decrease working bills, together with worker-associated and third-occasion bills, and a$16.8 million lower in direct and incremental working bills incurred in reference to the COVID-19 pandemic.
Year Ended
Net Loss from Continuing Operations
Segment web loss from persevering with operations decreased$211.0 million , or 58%, to$150.6 million for Twelve Months 2020 from$361.6 million for Twelve Months 2019, primarily on account of$154.6 million of decrease after-tax losses from decreases within the estimated truthful worth of Iké, an$84.4 million tax profit associated to the utilization of web working losses in reference to the CARES Act in Twelve Months 2020, the absence of$29.6 million of after-tax debt associated expenses related to refinancing debt at a decrease rate of interest in Twelve Months 2019. These will increase have been partially offset by a$55.8 million after-tax lower in web realized good points on investments and truthful worth adjustments to fairness securities as effectively as$21.2 million of after-tax direct and incremental working bills incurred in reference to the COVID-19 pandemic.
Total Revenues
Total revenues decreased$81.7 million , or 86%, to$13.5 million for Twelve Months 2020 from$95.2 million for Twelve Months 2019, primarily pushed by an$65.2 million lower in web realized good points on investments and truthful worth adjustments to fairness securities largely on account of$22.6 million of greater web unrealized losses from the lower in truthful worth of our collateralized mortgage obligations,$21.4 million of decrease web unrealized good points on fairness securities, a$15.6 million enhance in impairments on fairness investments accounted for below the measurement various and a lower in web realized good points from gross sales of fastened maturity securities. The lower was additionally pushed by$18.7 million of decrease web funding earnings on account of a better focus of decrease yielding liquid investments in 2020 in comparison with 2019 and decrease earnings from actual property.
Total Benefits, Losses and Expenses
Total advantages, losses and bills decreased$210.2 million , or 42%, to$292.1 million for Twelve Months 2020 from$502.3 million for Twelve Months 2019. The lower in bills for Twelve Months 2020 was primarily as a result of absence of sure occasions that occurred in Twelve Months 2019, primarily$157.1 million of decrease losses related to Iké,$37.4 million of debt associated expenses related to refinancing debt at a decrease rate of interest and a$15.6 million impairment of sure intangible property from our acquisition ofGreen Tree Insurance Agency . The lower was additionally on account of$10.0 million of earnings, web of sure exit prices, from the sale of our CLO asset administration platform,$10.0 million enhance within the web pension profit and the absence of a$9.6 million loss on the sale of our Mortgage Solutions enterprise in Twelve Months 2019. These decreases have been partially offset by$26.8 million of direct and incremental working bills incurred in reference to the COVID-19 pandemic and$11.8 million decrease achieve associated to the discount of the valuation allowance on the Company's ACA danger hall program receivables. 56 --------------------------------------------------------------------------------
Discontinued Operations
Overview
The desk beneath presents info relating to the outcomes of the discontinued
operations for the intervals indicated:
For the Years Ended December 31, 2021 2020 2019 Revenues: Net earned premiums$ 42.6 $ 66.9 $ 61.2 Fees and different earnings 91.0 151.1 155.4 Net funding earnings 168.4 289.3 291.8
Net realized good points (losses) on investments and truthful
worth adjustments to fairness securities
4.2 (8.0) 9.3 Gain on disposal of companies 916.2 - - Total revenues 1,222.4 499.3 517.7 Benefits, losses and bills: Policyholder advantages 172.7 284.4 269.0 Amortization of deferred acquisition prices and worth of enterprise acquired 46.2 80.5 84.9 Underwriting, normal and administrative bills 39.0 62.1 64.0 Goodwill impairment - 137.8 - Total advantages, losses and bills 257.9 564.8 417.9 Income (loss) earlier than provision for earnings taxes 964.5 (65.5) 99.8 Provision for earnings taxes 205.6 12.2 19.4
Net earnings (loss) from discontinued operations
(77.7)
Year Ended
Net Income (Loss) from Discontinued Operations
Net earnings from discontinued operations was$758.9 million for Twelve Months 2021 in comparison with a web loss from discontinued operations of$77.7 million for Twelve Months 2020. The change was primarily on account of a$720.1 million after-tax achieve on the sale of the disposed Global Preneed enterprise in Twelve Months 2021. The achieve consists of$606.0 million in after-tax AOCI, primarily web unrealized good points on investments, that was acknowledged in earnings upon the sale. The enhance was additionally as a result of absence of a$137.8 million after-tax goodwill impairment on the disposed Global Preneed enterprise from Twelve Months 2020. These gadgets have been partially offset by decrease working outcomes for the disposed Global Preneed enterprise as Twelve Months 2021 included solely seven months of outcomes for the reason that sale closed onAugust 2, 2021 .
Total Revenues
Total revenues elevated$723.1 million to$1.22 billion for Twelve Months 2021 from$499.3 million for Twelve Months 2020, primarily as a result of achieve on the sale of the disposed Global Preneed enterprise. The achieve is inclusive of$774.2 million of pre-tax AOCI, primarily web unrealized good points on investments, that was acknowledged in earnings upon sale. The enhance in complete revenues was partially offset by a$120.9 million , or 42%, lower in web funding earnings, a$60.1 million , or 40%, lower in charges and different earnings and a$24.3 million , or 36%, lower in web earned premiums, primarily as a result of Twelve Months 2021 included solely seven months of outcomes.
Total Benefits, Losses and Expenses
Total advantages, losses and bills decreased$306.9 million , or 54%, to$257.9 million for Twelve Months 2021 from$564.8 million for Twelve Months 2020, primarily as a result of absence of a$137.8 million goodwill impairment on the disposed Global Preneed enterprise from Twelve Months 2020. The lower in complete advantages, losses and bills was additionally on account of a$111.7 million , or 39%, lower in policyholder advantages, a$34.3 million , or 43%, lower in amortization of deferred acquisition prices and worth of enterprise acquired and a$23.1 million , or 37%, lower in underwriting, normal and administrative bills, primarily as a result of Twelve Months 2021 included solely seven months of outcomes. 57 --------------------------------------------------------------------------------
Year Ended
Net Income (Loss) from Discontinued Operations
Net loss from discontinued operations was$77.7 million for Twelve Months 2020 in comparison with web earnings from discontinued operations of$80.4 million for Twelve Months 2019. The change was primarily as a result of$137.8 million after-tax impairment on the disposed Global Preneed enterprise goodwill, decrease amortization of deferred good points primarily related to the sale ofAssurant Employee Benefits , greater mortality from COVID-19, a lower in funding earnings, a rise in last want coverage cancellations within the disposed Global Preneed enterprise within the fourth quarter of 2020, partly on account of COVID-19, and up to date assumptions for the earnings patterns of new insurance policies. These decreases have been partially offset by the absence of a$9.9 million after-tax expense associated to an out of interval adjustment for over-capitalization of deferred acquisition prices occurring over a ten-12 months interval recorded in Twelve Months 2019.
Total Revenues
Total revenues decreased$18.4 million , or 4%, to$499.3 million for Twelve Months 2020 from$517.7 million for Twelve Months 2019, primarily on account of a$17.3 million lower in web realized good points on investments and truthful worth adjustments to fairness securities largely on account of decrease web unrealized good points on fairness securities, a$7.1 million lower in amortization of deferred good points primarily related to the sale ofAssurant Employee Benefits and decrease funding earnings, primarily due to decrease earnings from actual property and decrease yielding new cash fastened maturity securities purchases. The lower was partially offset by a rise in web earned premiums and charges and different earnings, primarily on account of progress in home pre-funded funeral insurance policies within theU.S. and gross sales of the Final Need product.
Total Benefits, Losses and Expenses
Total advantages, losses and bills elevated$146.9 million , or 35%, to$564.8 million for Twelve Months 2020 from$417.9 million for Twelve Months 2019, primarily as a result of$137.8 million impairment on the Global Preneed goodwill and a rise in policyholder advantages, primarily pushed by the expansion within the home preneed enterprise. The enhance was partially offset by a lower in amortization of deferred acquisition prices and worth of enterprise acquired, primarily as a result of absence of a$14.2 million expense recorded in Twelve Months 2019 associated to an out of interval adjustment for over-capitalization of deferred acquisition prices occurring over a ten-12 months interval, partially offset by progress within the home preneed enterprise and greater amortization ensuing from the rise in last want coverage cancellations within the disposed Global Preneed enterprise within the fourth quarter of 2020. 58 --------------------------------------------------------------------------------
Investments
We had complete investments of$8.67 billion and$8.22 billion as ofDecember 31, 2021 and 2020, respectively. Net unrealized good points on our fastened maturity securities portfolio decreased$259.5 million throughout Twelve Months 2021, from$570.9 million atDecember 31, 2020 to$311.4 million atDecember 31, 2021 , primarily on account of a rise inTreasury yields.
The following desk reveals the credit score high quality of our fastened maturity securities
portfolio as of the dates indicated:
Fair Value as of Fixed Maturity Securities by Credit Quality December 31, 2021 December 31, 2020 Aaa / Aa / A$ 4,066.5 56.4 %$ 4,051.3 59.5 % Baa 2,719.0 37.7 % 2,288.1 33.6 % Ba 333.7 4.6 % 384.4 5.6 % B and decrease 96.1 1.3 % 91.7 1.3 % Total$ 7,215.3 100.0 %$ 6,815.5 100.0 % The following desk reveals the foremost classes of web funding earnings for the intervals indicated: Years Ended December 31, 2021 2020 2019 Fixed maturity securities$ 232.8 $ 228.4 $ 241.2 Equity securities 14.9 14.5 14.9 Commercial mortgage loans on actual property 8.9 8.2 8.3 Short-term investments 2.1 5.7 10.8 Other investments 61.0 16.6 41.4 Cash and money equivalents 8.5 13.3 37.8 Revenue from consolidated funding entities (1) - 56.3 119.2 Total funding earnings 328.2 343.0 473.6 Investment bills (13.8) (20.5) (20.3) Expenses from consolidated funding entities (1) - (36.9) (70.1) Net funding earnings$ 314.4 $ 285.6 $ 383.2
(1)The following desk reveals the revenues web of bills from consolidated
funding entities for the intervals indicated.
Years
Ended
2021 2020 2019 Investment earnings from direct investments in: Real property funds (1) $ -$ 8.3 $ 25.1 CLO entities - 8.0 17.0 Investment administration charges - 3.1 7.0 Net funding earnings from consolidated funding entities $ - $
19.4
(1)The funding earnings from the actual property funds consists of earnings attributable to non-controlling curiosity of$1.1 million and$3.8 million for the years endedDecember 31, 2020 and 2019, respectively. Net funding earnings elevated$28.8 million , or 10%, to$314.4 million for Twelve Months 2021 from$285.6 million for Twelve Months 2020. The enhance was primarily pushed by greater earnings from different investments largely on account of greater earnings from gross sales of actual property three way partnership partnerships and greater valuations in our actual property three way partnership and different partnerships. Fixed maturity earnings elevated, largely on account of greater asset ranges, partially offset by decrease yields. Investment bills decreased on account of prior 12 months prices related to the disposed Global Preneed enterprise and one-time bills associated to the outsourcing of our actual property asset administration. These will increase have been offset partly by a lower in earnings from brief-time period investments and money and money equivalents primarily on account of continued low yields. Net funding earnings decreased$97.6 million , or 25%, to$285.6 million for Twelve Months 2020 from$383.2 million for Twelve Months 2019. The lower was primarily pushed by decrease earnings from different investments, primarily on account of decrease earnings from gross sales of actual property three way partnership partnerships and decrease unrealized good points from will increase in truthful market worth in every interval, and a lower in earnings from brief time period investments and money and money equivalents primarily on account of decrease money 59 --------------------------------------------------------------------------------
yields and unfavorable overseas trade. The lower was additionally on account of a
discount in earnings from fastened maturity securities on account of decrease-yielding new
cash bond purchases.
As of
monetary assure insurance coverage corporations. Included on this quantity was
million
however would have had a score of AA- with out the assure.
For extra info on our investments, see Notes 8 and 10 to the Consolidated
Financial Statements included elsewhere on this Report.
Liquidity and Capital Resources
The following part discusses our skill to generate money flows from every of our subsidiaries, borrow funds at aggressive charges and elevate new capital to meet our working and progress wants. Management believes that we'll have adequate liquidity to fulfill our wants over the subsequent twelve months, together with the power to pay curiosity on our debt and dividends on our frequent inventory.
Regulatory Requirements
Assurant, Inc. is a holding firm and, as such, has restricted direct operations of its personal. Our property consist primarily of the capital inventory of our subsidiaries. Accordingly, our future money flows rely upon the provision of dividends and different statutorily permissible funds from our subsidiaries, such as funds below our tax allocation settlement and below administration agreements with our subsidiaries. Our subsidiaries' skill to pay such dividends and make such different funds is regulated by the states and territories through which our subsidiaries are domiciled. These dividend rules differ from jurisdiction to jurisdiction and by sort of insurance coverage supplied by the relevant subsidiary, however typically require our insurance coverage subsidiaries to keep up minimal solvency necessities and restrict the quantity of dividends they'll pay to the holding firm. See "Item 1 - Business - Regulation -U.S. Insurance Regulation" and "Item 1A - Risk Factors - Legal and Regulatory Risks - Changes in insurance coverage regulation could cut back our profitability and restrict our progress." Along with solvency rules, the first driver in figuring out the quantity of capital used for dividends from insurance coverage subsidiaries is the extent of capital wanted to keep desired monetary power scores fromA.M. Best . For the 12 months endingDecember 31, 2022 , the utmost quantity of dividends our regulatedU.S. domiciled insurance coverage subsidiaries may pay us, below relevant legal guidelines and rules with out prior regulatory approval, is roughly$475.3 million . In addition, our worldwide and non-insurance coverage subsidiaries present further sources of dividends.
Regulators or score companies may develop into extra conservative of their
methodology and standards, rising capital necessities for our insurance coverage
subsidiaries or the enterprise. In 2021, the next actions have been taken by the
score companies:
A.M. Best •InJuly 2021 , affirmed all monetary power scores ofAssurant, Inc. and our subsidiaries, every with a steady outlook, apart fromUnion Security Life Insurance Company of New York , whose monetary power score was withdrawn inAugust 2021 at our request, following the sale of the disposed Global Preneed enterprise.
Moody’s
•InJune 2021 , assigned a Baa3 score to our new 2032 Senior Notes (as outlined beneath) with a steady outlook. •InAugust 2021 , upgraded the insurance coverage monetary power score ofAmerican Bankers Life Assurance Company of Florida to A3 from Baa1. •InMarch 2021 , affirmed all different scores with a steady outlook.
S&P
•InJune 2021 , assigned a BBB score to our new 2032 Senior Notes (as outlined beneath) with a steady outlook. •InSeptember 2021 , affirmed all different scores with a steady outlook. For additional info on our scores and the dangers of scores downgrades, see "Item 1 - Business - Ratings" and "Item 1A - Risk Factors - Financial Risks - A decline within the monetary power scores of our insurance coverage subsidiaries may adversely have an effect on our outcomes of operations and monetary situation." 60 --------------------------------------------------------------------------------
Holding Company
As ofDecember 31, 2021 , we had roughly$1.05 billion in holding firm liquidity,$827.0 million above our focused minimal stage of$225.0 million . The goal minimal stage of holding firm liquidity, which can be utilized for unexpected capital wants at our subsidiaries or liquidity wants on the holding firm, is calibrated based mostly on roughly one 12 months of company working losses and curiosity bills. We use the time period "holding company liquidity" to characterize the portion of money and different liquid marketable securities held atAssurant, Inc. , out of a complete of$1.16 billion of holding firm funding securities and money, which we're not in any other case holding for a selected goal as of the steadiness sheet date. We can use such property for inventory repurchases, stockholder dividends, acquisitions and different company functions. Dividends or returns of capital paid by our subsidiaries, web of infusions and excluding quantities used for or because of this of acquisitions or obtained from tendencies, have been$728.6 million and$821.0 million for Twelve Months 2021 and Twelve Months 2020, respectively, which included roughly$12.0 million and$31.0 million , respectively, of dividends from subsidiaries, web of infusions, within the disposed Global Preneed enterprise. We use these money inflows primarily to pay holding firm working bills, to make curiosity funds on indebtedness, to make dividend funds to our frequent stockholders, to fund investments and acquisitions, and to repurchase our frequent inventory. From time to time, we might also search to buy excellent debt in open market repurchases or privately negotiated transactions.
Dividends and Repurchases
During Twelve Months 2021 and Twelve Months 2020, we made frequent inventory
repurchases and paid dividends to our frequent stockholders of
OnJanuary 11, 2022 , the Board declared a quarterly dividend of$0.68 per frequent share payable onMarch 21, 2022 to stockholders of report as ofFebruary 28, 2022 . We paid dividends of$0.68 per frequent share onDecember 20, 2021 to stockholders of report as ofNovember 29, 2021 . This represented a 3% enhance to the quarterly dividend of$0.66 per frequent share paid onSeptember 21 ,June 22 , andMarch 15, 2021 . We paid a quarterly dividend of$1.6250 per share of MCPS onMarch 15, 2021 to stockholders of report as ofMarch 1, 2021 , which was the ultimate dividend paid on the MCPS. The MCPS transformed into shares of frequent inventory inMarch 2021 . Refer to "-Mandatory Convertible Preferred Stock" beneath. Any willpower to pay future dividends will probably be on the discretion of the Board and will probably be dependent upon numerous elements, together with: our subsidiaries' funds of dividends and different statutorily permissible funds to us; our outcomes of operations and money flows; our monetary situation and capital necessities; normal enterprise situations and progress prospects; any authorized, tax, regulatory and contractual restrictions on the cost of dividends; and any different elements the Board deems related. The Credit Facility additionally comprises limitations on our skill to pay dividends to our stockholders and repurchase capital inventory if we're in default, or such dividend funds or repurchases would trigger us to be in default, of our obligations thereunder. In addition, if we elect to defer the cost of curiosity on our Subordinated Notes, we typically could not make funds on or repurchase any shares of our capital inventory. During Twelve Months 2021, we repurchased 5,337,122 shares of our excellent frequent inventory at a price of$844.4 million , unique of commissions. In January andMay 2021 , the Board approved new share repurchase applications for as much as$600.0 million and$900.0 million , respectively, of our excellent frequent inventory. As ofDecember 31, 2021 ,$842.1 million combination value at buy remained unused below theMay 2021 authorization. The timing and the quantity of future repurchases will rely on numerous elements, together with these listed above. We count on to deploy capital primarily to assist enterprise progress, fund different investments and return capital to shareholders, topic to Board approval and market situations. In addition, we accomplished the sale of the disposed Global Preneed enterprise to CUNA inAugust 2021 for web proceeds of$1.31 billion and, as beforehand disclosed, we intend to return$900.0 million to shareholders by way of share repurchases inside one 12 months of closing. Refer to Note 4 to the Consolidated Financial Statements included elsewhere on this Report.
Mandatory Convertible Preferred Stock
InMarch 2018 , we issued 2,875,000 shares of our MCPS. InMarch 2021 , every excellent share of MCPS transformed robotically into 0.9405 shares of frequent inventory, or 2,703,911 frequent shares in complete plus an immaterial quantity of money in lieu of fractional shares. Dividends on the MCPS have been payable on a cumulative foundation when, as and if declared, at an annual fee of 6.50% of the liquidation desire of$100.00 per share. We paid most well-liked inventory dividends of$4.7 million and$18.7 million for Twelve Months 2021 and Twelve Months 2020, respectively. For further info relating to the MCPS, see Note 20 to the Consolidated Financial Statements included elsewhere on this Report. 61 --------------------------------------------------------------------------------
Assurant Subsidiaries
The main sources of funds for our subsidiaries consist of premiums and charges collected, proceeds from the gross sales and maturity of investments and web funding earnings. Cash is primarily used to pay insurance coverage claims, agent commissions, working bills and taxes. We typically make investments our subsidiaries' funds to be able to generate funding earnings. We conduct periodic asset legal responsibility research to measure the period of our insurance coverage liabilities, to develop optimum asset portfolio maturity constructions for our important traces of enterprise and finally to evaluate that money flows are adequate to satisfy the timing of money wants. These research are performed in accordance with formal firm-broad Asset Liability Management tips. To full a examine for a specific line of enterprise, fashions are developed to mission asset and legal responsibility money flows and steadiness sheet gadgets below a assorted set of believable financial eventualities. These fashions contemplate many elements together with the present funding portfolio, the required capital for the associated property and liabilities, our tax place and projected money flows from each current and projected new enterprise. For dangers associated to modeling, see "Item 1A - Risk Factors - Financial Risks -Actual outcomes could differ materially from the analytical fashions we use to help in our resolution-making in key areas resembling pricing, disaster dangers, reserving and capital administration." Alternative asset portfolio asset allocations are analyzed for important traces of enterprise. An funding portfolio maturity construction is then chosen from these profiles given our return hurdle and danger urge for food. Scenario testing of important legal responsibility assumptions and new enterprise projections can also be carried out. Our liabilities typically don't embody policyholder optionality, which suggests that the timing of funds is usually insensitive to the rate of interest setting. In addition, our funding portfolio is essentially comprised of extremely liquid public fastened maturity securities with a adequate part of such securities invested which might be close to maturity which can be offered with minimal danger of loss to satisfy money wants. Generally, our subsidiaries' premiums, charges and funding earnings, together with deliberate asset gross sales and maturities, present adequate money to pay claims and bills. However, there could also be cases when sudden money wants come up in extra of that obtainable from common working sources. In such cases, we have a number of choices to lift wanted funds, together with promoting property from the subsidiaries' funding portfolios, utilizing holding firm money (if obtainable), issuing business paper, or drawing funds from the Credit Facility (as outlined beneath).
Senior and Subordinated Notes
The following desk reveals the principal quantity and carrying worth of our
excellent debt, much less unamortized low cost and issuance prices as relevant, as
of
December 31, 2021 December 31, 2020 Principal Amount Carrying Value Principal Amount Carrying Value Floating Rate Senior Notes due March 2021 $ - $ - $ 50.0 $ 50.0 4.00% Senior Notes due March 2023 - - 350.0 348.9 4.20% Senior Notes due September 2023 300.0 299.0 300.0 298.4 4.90% Senior Notes due March 2028 300.0 297.5 300.0 297.2 3.70% Senior Notes due February 2030 350.0 347.3 350.0 347.0 2.65% Senior Notes due January 2032 350.0 346.4 - - 6.75% Senior Notes due February 2034 275.0 272.4 275.0 272.3 7.00% Fixed-to-Floating Rate Subordinated Notes due March 2048 400.0 395.9 400.0 395.4 5.25% Subordinated Notes due January 2061 250.0 244.0 250.0 243.7 Total Debt$ 2,202.5 $ 2,252.9 InJanuary 2021 , we repaid the remaining$50.0 million excellent combination principal quantity of our floating fee senior notes dueMarch 2021 . InJune 2021 , we issued 2.65% senior notes dueJanuary 2032 with an combination principal quantity of$350.0 million (the "2032 Senior Notes"). We used the proceeds from the issuance together with money available, to redeem all of the$350.0 million excellent combination principal quantity of our 4.00% senior notes dueMarch 2023 and paid accrued curiosity, associated premiums, charges and bills inJuly 2021 . 62 -------------------------------------------------------------------------------- In the subsequent 5 years, now we have one upcoming debt maturity inSeptember 2023 when our 4.20% senior notes with an impressive combination principal of$300.0 million are due. For further info, see Note 19 to the Consolidated Financial Statements included elsewhere on this Report.
Credit Facility and Commercial Paper Program
InDecember 2021 , we entered right into a$500.0 million 5-12 months senior unsecured revolving credit score facility (the "Credit Facility") with a syndicate of banks organized byJPMorgan Chase Bank, N.A . andWells Fargo Bank, National Association . The Credit Facility changed our prior 5-12 months$450.0 million revolving credit score facility, which terminated upon the effectiveness of the Credit Facility. The Credit Facility gives for revolving loans and the issuance of multi-financial institution, syndicated letters of credit score and letters of credit score from a sole issuing financial institution in an combination quantity of$500.0 million , which can be elevated up to$700.0 million . The Credit Facility is offered tillDecember 2026 , supplied we're in compliance with all covenants. The Credit Facility has a sublimit for letters of credit score issued thereunder of$50.0 million . The proceeds from these loans could also be used for our business paper program or for normal company functions.
We made no borrowings utilizing the Credit Facility or our prior 5-12 months
have been excellent as of
Our business paper program requires us to keep up liquidity services both in an obtainable quantity equal to any excellent notes from this system or in an quantity adequate to keep up the scores assigned to the notes issued from the program. Our business paper is rated AMB-1 byA.M. Best , P-3 by Moody's and A-2 by S&P. Our subsidiaries don't keep business paper or different borrowing services. This program is presently backed up by the Credit Facility, of which$495.5 million was obtainable as ofDecember 31, 2021 , and$4.5 million letters of credit score have been excellent.
We didn’t use the business paper program throughout Twelve Months 2021 and there
have been no quantities referring to the business paper program excellent as of
Covenants
The Credit Facility comprises restrictive covenants together with:
(i)Maintenance of a most consolidated complete debt to capitalization ratio on
the final day of any fiscal quarter of not higher than 0.35 to 1.0; and
(ii)Maintenance of a consolidated adjusted web value in an quantity not lower than a "Minimum Amount" equal to the sum of (a)$4.20 billion , (b) 25% of consolidated web earnings (if constructive) for every fiscal quarter ending afterDecember 31, 2021 and (c) 25% of the online money proceeds obtained from any capital contribution to, or issuance of any capital inventory, disqualified capital inventory and hybrid securities.
In the occasion of a breach of sure covenants, all obligations below the Credit
Facility, together with unpaid principal and accrued curiosity and excellent
letters of credit score, could develop into instantly due and payable.
Letters of Credit
In the traditional course of enterprise, letters of credit score are issued primarily to assist reinsurance preparations through which we're the reinsurer. These letters of credit score are supported by commitments below which we're required to indemnify the monetary establishment issuing the letter of credit score if the letter of credit score is drawn. We had$7.2 million and$7.6 million of letters of credit score excellent as ofDecember 31, 2021 and 2020, respectively.
Cash Flows
We monitor money flows on the consolidated, holding firm and subsidiary
ranges. Cash movement forecasts on the consolidated and subsidiary ranges are
supplied on a month-to-month foundation, and we use pattern and variance analyses to mission
future money wants making changes to the forecasts when wanted.
The desk beneath reveals our current web money flows for the intervals indicated:
63 -------------------------------------------------------------------------------- For the
Years Ended
2021 2020 2019 Net money supplied by (utilized in): Operating actions - persevering with operations$ 630.5 $ 1,114.3 $ 1,128.3 Operating actions - discontinued operations 151.2 227.7 285.1 Operating actions 781.7 1,342.0 1,413.4 Investing actions - persevering with operations 302.8 (519.4) (336.9) Investing actions - discontinued operations (145.2) (215.8) (282.9) Investing actions 157.6 (735.2) (619.8) Financing actions - persevering with operations (1,089.8) (264.8) (179.2) Financing actions - discontinued operations - - - Financing actions (1,089.8) (264.8) (179.2) Effect of trade fee adjustments on money and money equivalents - persevering with operations (23.5) 19.4 (1.6) Effect of trade fee adjustments on money and money equivalents - discontinued operations 0.2 0.1 0.3 Effect of trade fee adjustments on money and money equivalents (23.3) 19.5 (1.3) Net change in money$ (173.8) $ 361.5 $ 613.1
Cash Flows for the Years Ended
Operating Activities
We usually generate working money inflows from premiums collected from our insurance coverage merchandise, charges obtained for providers and earnings obtained from our investments whereas outflows consist of coverage acquisition prices, advantages paid and working bills. These web money flows are then invested to assist the obligations of our insurance coverage merchandise and required capital supporting these merchandise. Our money flows from working actions are affected by the timing of premiums, charges, and funding earnings obtained and bills paid. Net money supplied by working actions from persevering with operations was$630.5 million and$1.11 billion for Twelve Months 2021 and Twelve Months 2020, respectively. The lower in web money supplied by working actions was primarily as a result of timing of sure money funds and enterprise actions from our Global Lifestyle phase. The main elements contributing to the variance included timing of cumulative funds to a vendor associated to varied applications for buying cell units used to satisfy insurance coverage claims or generate income by way of gross sales to 3rd events and greater fee funds related with fourth quarter 2020 premiums that have been paid in first quarter 2021. The lower was additionally as a result of absence of a$204.9 million tax refund, together with curiosity, associated to the power to hold again working losses to prior intervals below the CARES Act that was collected throughout Twelve Months 2020 and greater tax funds, web of refunds, primarily as a result of achieve on sale of the disposed Global Preneed enterprise and a rise in taxable earnings for Twelve Months 2021. These decreases have been partially offset by a rise in premiums collected in reference to the continued progress inGlobal Automotive . Net money supplied by working actions from persevering with operations was$1.11 billion and$1.13 billion for Twelve Months 2020 and Twelve Months 2019, respectively. The lower in web money supplied by working actions was primarily as a result of timing of sure money funds and enterprise actions from our Global Lifestyle enterprise. The main elements contributing to the lower included the absence of a previous 12 months receipt of pay as you go premiums inJapan given subsequent adjustments in cost phrases below this system and the timing of cumulative funds to a vendor associated to a program initiated in 2019 for buying cell units used to satisfy insurance coverage claims or generate income by way of gross sales to 3rd events. These decreases have been partially offset by receipt of a$204.9 million tax refund, which incorporates curiosity, associated to the power to carryback web working losses to prior intervals below the CARES Act and greater collections of premium receivable balances largely on account of timing.
Investing Activities
Net money supplied by investing actions from persevering with operations was$302.8 million for Twelve Months 2021 in comparison with web money utilized in investing actions from persevering with operations of$519.4 million for Twelve Months 2020, respectively. The enhance in money supplied by investing actions was primarily pushed by a rise in money from gross sales and maturities, web of purchases, as a result of ongoing administration of our funding portfolio and a discount in web money used for acquisitions. Twelve Months 2021 included$1.27 billion of proceeds from the sale of the disposed Global Preneed enterprise that have been largely reinvested inside our funding portfolio. Twelve Months 2020 included$135.8 million of web money used for 64 -------------------------------------------------------------------------------- the AFAS acquisition,$276.8 million of web money used for the HYLA acquisition and$51.3 million of money outflow, web of$22.0 million of proceeds from a overseas foreign money hedge, for the sale of our pursuits in Iké. Additionally, Twelve Months 2020 included a$34.0 million money outflow to Iké Grupo for the Iké Loan that was repaid and mirrored as a web money influx for Twelve Months 2021. These will increase have been partially offset by the absence of$197.1 million of web money supplied by consolidated funding entities and a$66.2 million enhance in purchases of property and gear largely on account of continued investments in info expertise supporting our core operations. Net money utilized in investing actions from persevering with operations was$519.4 million and$336.9 million for Twelve Months 2020 and Twelve Months 2019, respectively. The enhance in web money utilized in investing actions was primarily on account of$458.6 million of money used for acquisitions, web of$135.5 million of money acquired, partially offset by the timing of web purchases of securities in reference to collateralized mortgage obligations constructions launched in 2019. For further info, see Notes 3 and 4 to the Consolidated Financial Statements included elsewhere on this Report. The remaining adjustments have been as a result of ongoing administration of our funding portfolio.
Financing Activities
Net money utilized in financing actions from persevering with operations was$1.09 billion and$264.8 million for Twelve Months 2021 and Twelve Months 2020, respectively. The enhance in web money utilized in financing actions was primarily on account of a$542.3 million enhance in share repurchases, a portion of which was funded utilizing the proceeds from the Global Preneed sale, the issuance of the 5.25% subordinated notes dueJanuary 2061 with an combination principal quantity of$250.0 million (the "2061 Subordinated Notes"), web of issuance prices, of$243.7 million in Twelve Months 2020, the$50.0 million reimbursement of our floating fee senior notes dueMarch 2021 in first quarter 2021 and the loss on extinguishment of debt associated to the reimbursement of our 4.00% senior notes dueMarch 2023 . Net money utilized in financing actions from persevering with operations was$264.8 million and$179.2 million for Twelve Months 2020 and Twelve Months 2019, respectively. The enhance in web money utilized in financing actions was primarily on account of$268.4 million of decrease money from our CIEs supplied, web of repayments of borrowings to brief-time period warehouse services, primarily associated to the timing of CLO constructions launched in 2019. Also contributing was an enhance within the repurchase of the Company's excellent frequent inventory for Twelve Months 2020. These have been partially offset by the issuance of the 2061 Subordinated Notes, web of issuance prices, of$243.7 million in Twelve Months 2020 and a$31.4 million loss on extinguishment of debt in reference to the tender provide of$100.0 million of our 6.75% notes due 2034 recorded in Twelve Months 2019. For further info, see Notes 9 and 19, respectively, to the Consolidated Financial Statements included elsewhere on this Report.
Discontinued operations
Changes in money flows from the working and investing actions from our discontinued operations for Twelve Months 2021 as in comparison with Twelve Months 2020 have been decrease primarily on account of Twelve Months 2021 together with solely seven months of web money flows for the reason that sale closed onAugust 2, 2021 . Cash flows supplied by working actions from our discontinued operations for Twelve Months 2020 in comparison with Twelve Months 2019 have been decrease primarily on account of greater mortality in Twelve Months 2020 and a rise in last want coverage cancellations within the disposed Global Preneed enterprise in Twelve Months 2020, partially on account of COVID-19. Cash flows utilized in investing actions from discontinued operations for Twelve Months 2020 in comparison with Twelve Months 2019 have been decrease on account of ongoing administration of the funding portfolio. The desk beneath reveals our money outflows for taxes, curiosity and dividends for the intervals indicated: For the Years Ended December 31, 2021 2020 2019 Income taxes paid$ 221.1 $ 98.5 $ 93.1 Interest paid on debt 109.8 103.6 103.2 Common inventory dividends 157.6 154.6 151.4 Preferred inventory dividends 4.7 18.7 18.7 Total$ 493.2 $ 375.4 $ 366.4 65
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Contractual Obligations and Commitments
We have contractual obligations and commitments to 3rd events because of this of our operations, as detailed within the desk beneath by maturity date as ofDecember 31, 2021 : As of December 31, 2021 Less than 1 1-3 3-5 More than 5 Total Year Years Years Years Contractual obligations: Insurance liabilities (1)$ 1,224.0 $ 862.4
Debt and associated curiosity
4,017.0 109.2 502.7 193.2 3,211.9 Operating leases 69.4 17.4 24.4 11.5 16.1 Pension obligations and postretirement advantages (2) 538.1 71.4 114.9 105.3 246.5
Commitments:
Investment purchases excellent: Commercial mortgage loans on actual property 14.1 14.1 Capital contributions to non-consolidated VIEs 38.8 38.8 Liability for unrecognized tax advantages 19.9 16.2 3.7
Total obligations and commitments
(1)Insurance liabilities replicate undiscounted estimated money funds to be made to policyholders, web of anticipated future premium money receipts on in-drive insurance policies and excluding absolutely reinsured runoff operations. The complete gross reserve for absolutely reinsured runoff operations that was excluded was$625.7 million which, if the reinsurers defaulted, can be payable over a 30+ 12 months interval with the bulk of the funds occurring after 5 years. Additional info on the reinsurance preparations could be present in Note 18 to the Consolidated Financial Statements included elsewhere on this Report. As a end result, the quantities introduced on this desk don't comply with the long run coverage advantages and bills and claims and advantages payable within the consolidated steadiness sheets. (2)Our pension obligations and postretirement advantages embody an Assurant Pension Plan, numerous non-certified pension plans (together with an Executive Pension Plan) and sure life and well being care advantages for retired staff and their dependents ("Retirement Health Benefits"), all of which have been frozen in 2016. InFebruary 2020 , we amended the Retirement Health Benefits to terminate such plan advantages to retirees efficientDecember 31, 2024 . Due to the Assurant Pension Plan's present overfunded standing, no contributions have been made throughout 2021 and none are anticipated to be made in 2022. See Note 24 to the Consolidated Financial Statements included elsewhere on this Report for extra info. Liabilities for future coverage advantages and bills have been included within the commitments and contingencies desk. Significant uncertainties relating to those liabilities embody mortality, morbidity, bills, persistency, funding returns, inflation, contract phrases and the timing of funds.
Off-Balance Sheet Arrangements
The Company doesn’t have any off-steadiness sheet preparations which might be fairly
more likely to have a fabric impact on the monetary situation, outcomes of
operations, liquidity or capital sources of the Company.
Item 7A. Quantitative and Qualitative Disclosures About Market Risk
We are uncovered to potential loss from numerous market dangers, particularly
rate of interest danger and credit score danger. Additionally, we’re uncovered, to a lesser
extent, to overseas trade danger.
Interest fee danger is the likelihood that the truthful worth of liabilities will change roughly than the market worth of investments in response to adjustments in rates of interest, together with adjustments in funding yields and adjustments in spreads on account of credit score dangers and different elements. Credit danger is the likelihood that counterparties could not be capable of meet cost obligations once they develop into due. We assume counterparty credit score danger in many types. A counterparty is any particular person or entity from which money or different types of consideration are anticipated to extinguish a legal responsibility or obligation to us. We have publicity to credit score danger primarily from clients, as a holder of fastened maturity securities and by getting into into reinsurance cessions. Foreign trade danger is the likelihood that adjustments in trade charges produce an opposed impact on earnings and fairness when measured in home foreign money. This danger is largest when property backing liabilities payable in a single foreign money are invested in 66 --------------------------------------------------------------------------------
monetary devices of one other foreign money. Our normal precept is to spend money on
property that match the foreign money through which we count on the liabilities to be paid.
Interest Rate Risk
Interest fee danger arises as we make investments substantial funds in curiosity-delicate fastened earnings property, resembling fastened maturity securities, mortgage-backed and asset-backed securities and business mortgage loans, primarily within theU.S. andCanada . There are two types of rate of interest danger - worth danger and reinvestment danger. Price danger happens when fluctuations in rates of interest have a direct affect in the marketplace valuation of these investments. As rates of interest rise, the market worth of these investments falls, and conversely, as rates of interest fall, the market worth of these investments rises. Reinvestment danger is primarily related to the necessity to reinvest money flows (primarily coupons and maturities) in an unfavorable decrease rate of interest setting. In addition, for securities with embedded choices resembling callable bonds, mortgage-backed securities and sure asset-backed securities, reinvestment danger happens when fluctuations in rates of interest have a direct affect on anticipated money flows. As rates of interest fall, a rise in prepayments on these property leads to sooner than anticipated receipt of money flows, forcing us to reinvest the proceeds in an unfavorable decrease rate of interest setting. Conversely, as rates of interest rise, a lower in prepayments on these property leads to later than anticipated receipt of money flows, forcing us to forgo reinvesting in a good greater rate of interest setting.
We handle rate of interest danger by choosing investments with traits such
as period, yield, foreign money and liquidity tailor-made to the anticipated money
outflow traits of our insurance coverage and reinsurance liabilities.
The rate of interest sensitivity relating to cost danger of our fastened maturity securities funding portfolio is assessed utilizing hypothetical eventualities that assume a number of constructive and unfavorable parallel shifts of the yield curves. We have assumed that theU.S. and Canadian yield curve shifts are equal in route and magnitude. The particular person securities are repriced below every situation utilizing a valuation mannequin. For investments resembling callable bonds and mortgage-backed and asset-backed securities, a prepayment mannequin is utilized in conjunction with a valuation mannequin. Our precise expertise could differ from the outcomes famous beneath notably on account of assumptions utilized or if occasions happen that weren't included within the methodology. The following tables summarize the outcomes of this evaluation for bonds, mortgage-backed securities and asset-backed securities held in our funding portfolio as of the dates indicated: Interest Rate Movement Analysis of Market Value of Fixed Maturity Securities Investment Portfolio December 31, 2021 -100 bps -50 bps Base 50 bps 100 bps Total market worth$ 7,597.1 $ 7,402.0 $ 7,215.3 $ 7,036.7 $ 6,865.7 % change in market worth from base case 5.29 % 2.59 % - % (2.48) % (4.85) % $ change in market worth from base case$ 381.8 $ 186.7 $ -$ (178.6) $ (349.6) December 31, 2020 -100 bps -50 bps Base 50 bps 100 bps Total market worth$ 7,067.4 $ 6,905.8 $ 6,815.5 $ 6,601.4 $ 6,457.2 % change in market worth from base case 3.70 % 1.32 % - % (3.14) % (5.26) % $ change in market worth from base case$ 251.9 $ 90.3 $ -$ (214.1) $ (358.3) The rate of interest sensitivity referring to reinvestment danger of our fastened maturity securities funding portfolio is assessed utilizing hypothetical eventualities that assume purchases within the main market and contemplate the results of rates of interest on gross sales. The results of embedded choices, together with name or put options aren't thought of. Our precise outcomes could differ from the outcomes famous beneath notably on account of assumptions utilized or if occasions happen that weren't included within the methodology. 67 --------------------------------------------------------------------------------
The following tables summarize the outcomes of this evaluation on our reported
portfolio yield as of the dates indicated:
Interest Rate
Movement Analysis
of Portfolio Yield of Fixed Maturity
Securities Investment Portfolio
December 31, 2021 -100 bps -50 bps Base 50 bps 100 bps Portfolio yield 3.23 % 3.39 % 3.55 % 3.71 % 3.87 % % change in portfolio yield (0.32) % (0.16) % - % 0.16 % 0.32 % December 31, 2020 -100 bps -50 bps Base 50 bps 100 bps Portfolio yield 3.51 % 3.63 % 3.76 % 3.89 % 4.01 % % change in portfolio yield (0.25) % (0.13) % - % 0.13 % 0.25 % Credit Risk
We have publicity to credit score danger primarily from clients, as a holder of fastened
maturity securities and by getting into into reinsurance cessions.
Our danger administration technique and funding coverage is to spend money on debt devices of excessive credit score high quality issuers and to restrict the quantity of credit score publicity with respect to anyone issuer. We try and restrict our credit score publicity by imposing fastened maturity portfolio limits on particular person issuers based mostly upon credit score high quality. Currently our portfolio limits are 1.5% for issuers rated AA- and above, 1% for issuers rated A- to A+, 0.75% for issuers rated BBB- to BBB+, 0.38% for issuers rated BB- to BB+ and 0.25% for issuers rated B and beneath. These portfolio limits are additional decreased for sure issuers with whom now we have credit score publicity on reinsurance agreements. For our portfolio limits, we use credit score scores from Moody's, S&P,Fitch Ratings, Inc. andDBRS, Inc. (collectively, the "NRSROs") to find out an issuer's score. When three or extra credit score scores can be found for an issuer, the second lowest score will probably be used. When two or fewer credit score scores can be found for an issuer, the decrease score will probably be used.
The following desk presents our fastened maturity securities funding portfolio
by scores of the NRSROs as of the dates indicated:
December 31, 2021 December 31, 2020 Percentage of Percentage of Rating Fair Value Total Fair Value Total Aaa/Aa/A$ 4,066.5 56.4 %$ 4,051.3 59.5 % Baa 2,719.0 37.7 % 2,288.1 33.6 % Ba 333.7 4.6 % 384.4 5.6 % B and decrease 96.1 1.3 % 91.7 1.3 % Total$ 7,215.3 100.0 %$ 6,815.5 100.0 % We are additionally uncovered to the credit score danger of our reinsurers. When we buy reinsurance, we're nonetheless liable to our insureds regardless of whether or not we get reimbursed by our reinsurer. As half of our general danger and capability administration technique, we buy reinsurance for sure dangers underwritten by our numerous enterprise segments as described above below "Item 7 - Management's Discussion and Analysis of Financial Condition and Results of Operations - Critical Accounting Estimates - Reinsurance." We had$6.18 billion and$6.61 billion of reinsurance recoverables as ofDecember 31, 2021 and 2020, respectively, the bulk of that are protected from credit score danger by numerous varieties of danger mitigation mechanisms resembling trusts, letters of credit score or by withholding the property in a modified coinsurance or co-funds-withheld association. For instance, reserves of$410.2 million as ofDecember 31, 2021 referring to coinsurance preparations withJohn Hancock associated to the sale of LTC that's backed by trusts. If the worth of the property in these trusts falls beneath the worth of the related liabilities,John Hancock will probably be required to place extra property within the trusts. We could also be depending on the monetary situation ofJohn Hancock , whoseA.M. Best monetary power score is presently A+, with a steady outlook. As ofDecember 31, 2021 , we had$817.4 million of reinsurance recoverables from ERAC which might be included in property held on the market on our consolidated steadiness sheet associated to the settlement to promote JALIC.A.M. Best withdrew its score for ERAC in 2019 and there are presently no property or different collateral backing reserves referring to the reinsurance recoverable from ERAC. General Electric Company, the final dad or mum of ERAC, has a capital upkeep settlement in place to keep ERAC's 68 -------------------------------------------------------------------------------- RBC ratios at an appropriate regulatory stage, which has been maintained in current years by way of capital infusions into ERAC. For ERAC and different reinsurance recoverables that aren't protected by the chance mitigation mechanisms referenced above, we're depending on the creditworthiness of the reinsurer. See "Item 1A - Risk Factors - Financial Risks - Reinsurance will not be enough or obtainable to defend us towards losses, and we're topic to the credit score danger of reinsurers", "Item 1A - Risk Factors - Financial Risks - Through reinsurance, now we have offered or exited companies that might once more develop into our direct monetary and administrative accountability if the reinsurers develop into bancrupt" and Note 18 to the Consolidated Financial Statements included elsewhere on this Report.
Foreign Exchange Risk
We are uncovered to overseas trade danger arising from our worldwide operations, primarily inCanada . We even have overseas trade danger publicity to the British Pound, Brazilian Real, Euro, Mexican Peso and Argentine Peso. Total invested property denominated in currencies aside from the Canadian Dollar have been roughly 5% and 6% of our complete invested property atDecember 31, 2021 and 2020, respectively.
Foreign trade danger is mitigated by matching our liabilities below insurance coverage
insurance policies which might be payable in foreign exchange with investments which might be
denominated in such currencies.
The overseas trade danger sensitivity of our fastened maturity securities denominated in Canadian Dollars, whose steadiness was$423.2 million and$466.5 million of the entire market worth as ofDecember 31, 2021 and 2020, respectively, on our total fastened maturity securities portfolio is summarized in the next tables: Foreign Exchange Movement Analysis of Market Value of
December
31, 2021
Foreign trade spot fee at December 31, 2021, US Dollar to Canadian Dollar -10% -5% 0 5% 10% Total market worth$ 7,173.0
% change of market worth from base case
(0.59) % (0.29) % - % 0.29 % 0.59 % $ change of market worth from base case$ (42.3) $ (21.2) $ -$ 21.1 $ 42.3 December 31, 2020
Foreign trade spot fee at
Dollar to Canadian Dollar
-10% -5% 0 5% 10% Total market worth$ 6,768.9
% change of market worth from base case
(0.68) % (0.34) % - % 0.34 % 0.68 % $ change of market worth from base case$ (46.6)
The overseas trade danger sensitivity of our consolidated web earnings from persevering with operations is assessed utilizing hypothetical check eventualities that assume earnings in Canadian Dollars are acknowledged evenly all through a interval. Our precise outcomes could differ from the outcomes famous beneath notably on account of assumptions utilized or if occasions happen that weren't included within the methodology. For extra info on this danger, see "Item 1A - Risk Factors - Financial Risks - Fluctuations within the trade fee of theU.S. Dollar and different foreign exchange could materially and adversely have an effect on our outcomes of operations." The following tables summarize the outcomes of this evaluation on our reported web earnings from persevering with operations for the intervals indicated: 69 --------------------------------------------------------------------------------
Foreign Exchange Movement Analysis of Net Income from Continuing Operations Year Ended December 31, 2021 Foreign trade each day common fee for the 12 months endedDecember 31, 2021 , US Dollar to Canadian Dollar -10% -5% 0 5% 10% Net earnings from persevering with operations$ 610.8 $ 612.2 $ 613.5 $ 614.8 $ 616.2 % change of web earnings from base case (0.44) % (0.21) % - % 0.21 % 0.44 % $ change of web earnings from base case$ (2.7) $ (1.3) $ -$ 1.3 $ 2.7 Year Ended December 31, 2020 Foreign trade each day common fee for the 12 months endedDecember 31, 2020 , US Dollar to Canadian Dollar -10% -5% 0 5% 10% Net earnings from persevering with operations$ 517.6 $ 519.0 $ 520.4 $ 521.8 $ 523.2 % change of web earnings from base case (0.54) % (0.27) % - % 0.27 % 0.54 % $ change of web earnings from base case$ (2.8) $ (1.4) $ -$ 1.4 $ 2.8 Derivatives Derivatives are monetary devices whose values are derived from curiosity charges, overseas trade charges, monetary indices or the costs of securities or commodities. Derivative monetary devices could also be trade-traded or contracted within the over-the-counter market and embody swaps, futures, choices and ahead contracts.
Under insurance coverage statutes, our insurance coverage corporations could use spinoff monetary
devices to hedge precise or anticipated adjustments of their property or
liabilities, to duplicate money market devices or for sure
earnings-producing actions. These statutes typically prohibit the use of
derivatives for speculative functions. We typically don’t use spinoff
monetary devices.
In accordance with the steering on embedded derivatives, now we have bifurcated the modified coinsurance settlement with Talcott Resolution into its debt host and embedded spinoff (complete return swap) and recorded the embedded spinoff at truthful worth within the consolidated steadiness sheets. The invested property associated to this modified coinsurance settlement are included in different investments within the consolidated steadiness sheets.
For further info on derivatives, see Notes 8 and 19 to the
Consolidated Financial Statements included elsewhere on this Report.