(In millions, except number of shares and per share amounts)
The following discussion and analysis of our financial condition and results of operations should be read in conjunction with Management's Discussion and Analysis of Financial Condition and Results of Operations ("MD&A") and the annual audited consolidated financial statements for the year endedDecember 31, 2021 and accompanying notes included in our Annual Report on Form 10-K for the year endedDecember 31, 2021 (the "2021 Annual Report") filed with theU.S. Securities and Exchange Commission (the "SEC") and the unaudited consolidated financial statements for the three months endedMarch 31, 2022 and accompanying notes (the "Consolidated Financial Statements") included elsewhere in this Quarterly Report on Form 10-Q (this "Report"). The following discussion and analysis covers the three months endedMarch 31, 2022 ("First Quarter 2022" or "Three Months 2022") and the three months endedMarch 31, 2021 ("First Quarter 2021" or "Three Months 2021"). Some of the statements in this Report, including our business and financial plans and any statements regarding our anticipated future financial performance, business prospects, growth and operating strategies and similar matters, may constitute forward-looking statements within the meaning of theU.S. Private Securities Litigation Reform Act of 1995. You can identify these statements by the use of words such as "outlook," "objective," "will," "may," "can," "anticipates," "expects," "estimates," "projects," "intends," "plans," "believes," "targets," "forecasts," "potential," "approximately," and the negative version of those words and other words and terms with a similar meaning. Any forward-looking statements contained in this Report are based upon our historical performance and on current plans, estimates and expectations. The inclusion of this forward-looking information should not be regarded as a representation by us or any other person that our future plans, estimates or expectations will be achieved. Our actual results might differ materially from those projected in the forward-looking statements. We undertake no obligation to update or review any forward-looking statement, whether as a result of new information, future events or other developments. The following factors could cause our actual results to differ materially from those currently estimated by management:
(i)the loss of significant clients, distributors or other parties with whom we do business, or if we are unable to renew contracts with them on favorable terms, or if those parties face financial, reputational or regulatory issues;
(ii)significant competitive pressures, changes in customer preferences and disruption;
(iii)the failure to execute our strategy, including through the continuing service of key executives, senior leaders, highly-skilled personnel and a high-performing workforce;
(iv)the failure to find suitable acquisitions at attractive prices, integrate acquired businesses effectively or identify new areas for organic growth;
(v)our inability to recover should we experience a business continuity event;
(vi)the failure to manage vendors and other third parties on whom we rely to conduct business and provide services to our clients;
(vii)risks related to our international operations;
(viii)declines in the value of mobile devices, or export compliance or other risks in our mobile business;
(ix)our inability to develop and maintain distribution sources or attract and retain sales representatives and executives with key client relationships;
(x)risks associated with joint ventures, franchises and investments in which we share ownership and management with third parties;
(xi)the impact of catastrophe and non-catastrophe losses, including as a result of climate change;
(xii)negative publicity relating to our business or industry;
(xiii)the impact of general economic, financial market and political conditions and conditions in the markets in which we operate, including the conflict inUkraine and the current inflationary environment;
(xiv)the impact of the COVID-19 pandemic and measures taken in response thereto;
(xv)the adequacy of reserves established for claims and our inability to accurately predict and price for claims;
(xvi)a decline in financial strength ratings of our insurance subsidiaries or in our corporate senior debt ratings;
(xvii)fluctuations in exchange rates;
(xviii)an impairment of goodwill or other intangible assets;
(xix)the failure to maintain effective internal control over financial reporting;
(xx)unfavorable conditions in the capital and credit markets;
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(xxi)a decrease in the value of our investment portfolio, including due to market, credit and liquidity risks, and changes in interest rates;
(xxii)an impairment in the value of our deferred tax assets;
(xxiii)the unavailability or inadequacy of reinsurance coverage and the credit risk of reinsurers, including those to whom we have sold business through reinsurance;
(xxiv)the credit risk of some of our agents, third-party administrators and clients;
(xxv)the inability of our subsidiaries to pay sufficient dividends to the holding company and limitations on our ability to declare and pay dividends or repurchase shares;
(xxvi)limitations in the analytical models we use to assist in our decision-making;
(xxvii)the failure to effectively maintain and modernize our information technology systems and infrastructure, or the failure to integrate those of acquired businesses;
(xxviii)breaches of our information systems or those of third parties with whom we do business, or the failure to protect the security of data in such systems, including due to cyberattacks and as a result of working remotely; (xxix)the costs of complying with, or the failure to comply with, extensive laws and regulations to which we are subject, including those related to privacy, data security, data protection or tax;
(xxx)the impact of litigation and regulatory actions;
(xxxi)reductions or deferrals in the insurance premiums we charge;
(xxxii)changes in insurance, tax and other regulations;
(xxxiii)volatility in our common stock price and trading volume; and
(xxxiv)employee misconduct.
For additional information on factors that could affect our actual results, please refer to "Critical Factors Affecting Results" below and in Item 7 of our 2021 Annual Report, and "Item 1A-Risk Factors" below and in our 2021 Annual Report.
Reportable Segments
As of
•Global Lifestyle: includes mobile device solutions, extended service products and related services for consumer electronics and appliances, and credit and other insurance products (referred to as "Connected Living"); and vehicle protection and related services (referred to as "Global Automotive "); •Global Housing: includes lender-placed homeowners insurance, lender-placed manufactured housing insurance and lender-placed flood insurance (referred to as "Lender-placed Insurance "); renters insurance and related products (referred to as "Multifamily Housing "); and voluntary manufactured housing insurance, voluntary homeowners insurance and other specialty products (referred to as "Specialty and Other"); and
•Corporate and Other: includes corporate employee-related expenses and activities of the holding company.
In conjunction with the transition of our new CEO and chief operating decision maker, we changed our segment measure of profitability for its reportable segments to an Adjusted EBITDA metric, as the primary measure used for purposes of making decisions about allocating resources to the segments and assessing performance, from segment net income from continuing operations, effectiveJanuary 1, 2022 . Prior period amounts have been revised to reflect the new segment measure for profitability. The Company defines Adjusted EBITDA as net income from continuing operations, excluding net realized gains (losses) on investments and fair value changes to equity securities, COVID-19 direct and incremental expenses, loss on extinguishment of debt, net income (loss) attributable to non-controlling interests, interest expense, provision (benefit) for income taxes, depreciation expense, amortization of purchased intangible assets, restructuring costs related to strategic exit activities (outside of normal periodic restructuring and cost management activities), as well as other highly variable or unusual items. 29
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Executive Summary
Summary of Financial Results
Consolidated net income from continuing operations decreased$3.0 million , or 2%, to$145.5 million for First Quarter 2022 from$148.5 million for First Quarter 2021, primarily driven by a decrease in net unrealized gains from changes in fair value of equity securities, partially offset by lower reportable catastrophes (reportable catastrophe losses, net of reinsurance and client profit sharing adjustments, and including reinstatement and other premiums). We incurred$2.4 million of after-tax reportable catastrophes in First Quarter 2022, compared to$34.5 million in First Quarter 2021. Global Lifestyle Adjusted EBITDA increased$24.4 million , or 13%, to$217.4 million for First Quarter 2022 from$193.0 million for First Quarter 2021, due to strong results across Connected Living andGlobal Automotive . In Connected Living, mobile increased primarily from device protection performance inNorth America , including more favorable loss experience and subscriber growth, as well as an increase in global mobile devices serviced, mainly from higher trade-in volumes.Global Automotive increased from higher investment income, favorable loss experience in select ancillary products and expansion across distribution channels. Global Lifestyle net earned premiums, fees and other income increased$99.3 million , or 5%, to$1.96 billion for First Quarter 2022 from$1.86 billion for First Quarter 2021, led byGlobal Automotive premium increases from strong prior period sales. Connected Living increased modestly as mobile fee income growth from service and repair and trade-in volumes was partially offset by premium declines in runoff mobile programs. Global Housing Adjusted EBITDA increased$10.3 million , or 11%, to$103.8 million for First Quarter 2022 from$93.5 million for First Quarter 2021, primarily due to a$40.5 million pre-tax decrease in reportable catastrophes. Excluding reportable catastrophes, Adjusted EBITDA decreased$30.2 million , or 22%, due to higher non-catastrophe loss experience, including a$13.8 million increase within sharing economy offerings primarily related to a reserve adjustment and adverse development from policies previously written under less favorable terms.Lender-placed Insurance also experienced higher non-catastrophe losses mainly from elevated fire claims.Global Housing net earned premiums, fees and other income increased$3.8 million , or 1%, to$496.8 million for First Quarter 2022 from$493.0 million for First Quarter 2021, as growth inLender-placed Insurance from higher average insured values and premium rates andMultifamily Housing was partially offset by a decline in Specialty and Other from client runoff. Corporate and Other Adjusted EBITDA was$(22.2) million for First Quarter 2022 compared to$(27.9) million for First Quarter 2021, primarily driven by lower employee-related expenses and an increase in net investment income from higher asset balances.
Critical Factors Affecting Results
Our results depend on, among other things, the appropriateness of our product pricing, underwriting, the accuracy of our reserving methodology for future policyholder benefits and claims, the frequency and severity of reportable and non-reportable catastrophes, returns on and values of invested assets, our investment income and our ability to manage our expenses and achieve expense savings. Our results also depend on our ability to profitably grow our businesses, in particular our Connected Living,Multifamily Housing andGlobal Automotive businesses, and to maintain our position in ourLender-placed Insurance business. Factors affecting these items, including conditions in financial markets, the global economy and the markets in which we operate, including the conflict inUkraine , fluctuations in exchange rates, interest rates and inflation, including the current inflationary environment, and competition, may have a material adverse effect on our results of operations or financial condition. For more information on these and other factors that could affect our results, see "Item 1A-Risk Factors" below and in our 2021 Annual Report, and "Item 7-Management's Discussion and Analysis of Financial Condition and Results of Operations-Critical Factors Affecting Results" in our 2021 Annual Report. Our results may be impacted by our ability to continue to grow in the markets in which we operate, including in our Connected Living,Multifamily Housing andGlobal Automotive businesses, which may be impacted by our ability to provide a superior digital-first customer experience, including from our investments in technology and digital initiatives, to capitalize on the smart home opportunity, and to maintain relationships with significant clients, distributors and other parties or renew contracts with them on favorable terms. Our mobile business is subject to volatility in mobile device trade-in volumes based on the actual and anticipated timing of the release of new devices and carrier promotional programs, as well as to changes in consumer preferences. OurLender-placed Insurance revenues will also be impacted by changes in the housing market. In addition, across many of our businesses, we must respond to the actions of our competitors, the threat of disruption and the competition for talent. See "Item 1A-Risk Factors-Business, Strategic and Operational Risks-Our revenues and profits may decline if we are unable to maintain relationships with significant clients, distributors and other parties, or renew contracts with them on favorable terms, or if those parties face financial, reputational or regulatory issues," "Significant competitive 30
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pressures, changes in customer preferences and disruption could adversely affect our results of operations" and "The success of our business depends on the execution of our strategy, including through the continuing service of key executives, senior leaders, highly-skilled personnel and a high-performing workforce" in our 2021 Annual Report.
Critical Accounting Policies and Estimates
Our 2021 Annual Report describes the accounting policies and estimates that are critical to the understanding of our results of operations, financial condition and liquidity. The accounting policies and estimation process described in the 2021 Annual Report were consistently applied to the unaudited interim Consolidated Financial Statements for First Quarter 2022.
Recent Accounting Pronouncements
For a discussion of recent accounting pronouncements, see Note 3 to the Consolidated Financial Statements included elsewhere in this Report.
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Results of Operations
Assurant Consolidated
The table below presents information regarding our consolidated results of operations for the periods indicated:
For
the Three Months Ended
2022 2021 Revenues: Net earned premiums$ 2,136.4 $ 2,105.6 Fees and other income 322.4 249.9 Net investment income 86.3 76.3
Net realized (losses) gains on investments and fair value changes to equity securities
(62.4) 0.8 Total revenues 2,482.7 2,432.6 Benefits, losses and expenses: Policyholder benefits 494.5 528.7 Underwriting, selling, general and administrative expenses 1,790.5 1,682.4 Interest expense 26.9 28.4 Total benefits, losses and expenses 2,311.9 2,239.5 Income before provision for income taxes 170.8 193.1 Provision for income taxes 25.3 44.6 Net income from continuing operations 145.5 148.5 Net income from discontinued operations - 14.3 Net income 145.5 162.8 Less: Net loss attributable to non-controlling interest - 0.2 Net income attributable to stockholders 145.5 163.0 Less: Preferred stock dividends - (4.7) Net income attributable to common stockholders $
145.5
For the Three Months Ended
Net income from continuing operations decreased$3.0 million , or 2%, to$145.5 million for First Quarter 2022 from$148.5 million for First Quarter 2021, primarily driven by a decrease in net unrealized gains from changes in fair value of equity securities mostly related to four equity positions that went public in 2021 through SPAC mergers and preferred stocks given an increase in interest rates. The decrease was also due to higher non-catastrophe loss experience inGlobal Housing , primarily within our sharing economy offerings, as well asLender-placed Insurance . These decreases were partially offset by lower reportable catastrophes, strong growth in Global Lifestyle driven by Connected Living andGlobal Automotive results, as well as a$9.0 million one-time tax benefit from one of our international businesses.
Discontinued Operations
InAugust 2021 , we completed the sale of the legal entities which comprise the businesses previously reported as the Global Preneed segment and certain businesses previously disposed of through reinsurance, which were previously reported in the Corporate and Other segment (collectively, the "disposed Global Preneed business") to subsidiaries ofCUNA Mutual Group ("CUNA") for an aggregate purchase price at closing of$1.34 billion . For additional information, refer to Note 4 to the Consolidated Financial Statements included elsewhere in this Report. 32
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Global Lifestyle
The table below presents information regarding the Global Lifestyle segment's results of operations for the periods indicated:
For
the Three Months Ended
2022 2021 Revenues Net earned premiums$ 1,674.0 $ 1,648.7 Fees and other income 287.6 213.6 Net investment income 57.0 50.8 Total revenues 2,018.6 1,913.1 Benefits, losses and expenses Policyholder benefits 303.3 327.4 Underwriting, selling, general and administrative expenses 1,497.9 1,392.7 Total benefits, losses and expenses 1,801.2 1,720.1 Global Lifestyle Adjusted EBITDA $
217.4
Net earned premiums, fees and other income: Connected Living$ 1,072.5 $ 1,049.9 Global Automotive 889.1 812.4 Total$ 1,961.6 $ 1,862.3 Net earned premiums, fees and other income: Domestic$ 1,511.2 $ 1,380.6 International 450.4 481.7 Total$ 1,961.6 $ 1,862.3
For the Three Months Ended
Adjusted EBITDA increased$24.4 million , or 13%, to$217.4 million for First Quarter 2022 from$193.0 million for First Quarter 2021, primarily due to strong results across Connected Living andGlobal Automotive . In Connected Living, mobile increased primarily from device protection performance inNorth America from carrier and cable operator clients, including more favorable loss experience and subscriber growth, as well as an increase in global mobile devices serviced, mainly from higher trade-in volumes.Global Automotive increased from higher net investment income, favorable loss experience in select ancillary products and expansion across all distribution channels. Total revenues increased$105.5 million , or 6%, to$2.02 billion for First Quarter 2022 from$1.91 billion for First Quarter 2021. Fees and other income increased$74.0 million , or 35%, mainly driven by growth in our mobile business from our recently launched service and repair capabilities and higher trade-in volumes. Net earned premiums increased$25.3 million , or 2%, primarily driven by continued organic growth from strongU.S. sales in ourGlobal Automotive business across all distribution channels and domestic mobile subscriber growth within our cable operator distribution channel. The increase in net earned premiums was partially offset by the runoff of certain global mobile programs. Net investment income increased$6.2 million , or 12%, primarily due to higher real estate related income, higher fixed maturity asset levels and higher prepayment penalties for commercial mortgage loans on real estate. Total benefits, losses and expenses increased$81.1 million , or 5%, to$1.80 billion for First Quarter 2022 from$1.72 billion for First Quarter 2021. Underwriting, selling, general and administrative expenses increased$105.2 million , or 8%, primarily due to higher cost of sales in Connected Living from our recently launched service and repair capabilities and higher trade-in volumes. Higher commission expenses also contributed to the increase, mainly from growth across ourGlobal Automotive business and domestic mobile subscriber growth within our cable operator distribution channel, which was partially offset by the runoff of certain global mobile programs. Policyholder benefits decreased$24.1 million , or 7%, primarily due to the runoff of certain global mobile programs in our Connected Living business and favorable loss experience withinGlobal Automotive from select domestic ancillary products, partially offset by growth across ourGlobal Automotive and Connected Living businesses. 33
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The table below presents information regarding the
For
the Three Months Ended
2022 2021 Revenues Net earned premiums$ 462.4 $ 456.9 Fees and other income 34.4 36.1 Net investment income 20.8 19.4 Total revenues 517.6 512.4 Benefits, losses and expenses Policyholder benefits 191.2 201.3 Underwriting, selling, general and administrative expenses 222.6 217.6 Total benefits, losses and expenses 413.8 418.9 Global Housing Adjusted EBITDA $
103.8
Impact of reportable catastrophes $
3.1
Net earned premiums, fees and other income Lender-placed Insurance$ 266.8 $ 260.4 Multifamily Housing 119.9 117.4 Specialty and Other 110.1 115.2 Total$ 496.8 $ 493.0
For the Three Months Ended
Adjusted EBITDA increased$10.3 million , or 11%, to$103.8 million for First Quarter 2022 from$93.5 million for First Quarter 2021. Adjusted EBITDA for First Quarter 2022 included$3.1 million of reportable catastrophes compared to$43.6 million for First Quarter 2021. Excluding reportable catastrophes, Adjusted EBITDA decreased$30.2 million , or 22%, driven by higher non-catastrophe loss experience, including a$13.8 million increase within sharing economy offerings primarily related to a reserve adjustment and adverse development from policies previously written under less favorable terms.Lender-placed Insurance also experienced higher non-catastrophe losses mainly from elevated fire losses and an increase in claims costs, which were partially offset by higher average insured values and premium rates. Total revenues increased$5.2 million , or 1%, to$517.6 million for First Quarter 2022 from$512.4 million for First Quarter 2021. Net earned premiums increased$5.5 million , or 1%, primarily due to higher average insured values and premium rates in ourLender-placed Insurance business, and continued growth from renters insurance in ourMultifamily Housing business. These increases were partially offset by a decline in Specialty and Other from client run-off and higher estimated catastrophe premium from exposure growth primarily inLender-placed Insurance . Total benefits, losses and expenses decreased$5.1 million , or 1%, to$413.8 million for First Quarter 2022 from$418.9 million for First Quarter 2021. Policyholder benefits decreased$10.1 million , or 5%, from lower reportable catastrophe losses, partially offset by higher non-catastrophe loss experience, as described above. Underwriting, selling, general and administrative expenses increased$5.0 million , or 2%, mainly due to lower reclassification of loss adjustment expenses to policyholder benefits due to lower claims volume compared to First Quarter 2021 and higher operating costs due to growth. 34
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Corporate and Other
The tables below present information regarding the Corporate and Other's segment results of operations for the periods indicated:
For the
Three Months Ended
2022 2021 Revenues Net earned premiums $ - $ - Fees and other income 0.3 0.1 Net investment income 8.5 6.1 Total revenues 8.8 6.2 Benefits, losses and expenses Policyholder benefits - - General and administrative expenses 31.0 34.1 Total benefits, losses and expenses 31.0 34.1 Corporate and Other Adjusted EBITDA $
(22.2)
For the Three Months Ended
Adjusted EBITDA was$(22.2) million for First Quarter 2022 compared to$(27.9) million for First Quarter 2021. The change in results was primarily due to lower employee-related expenses and higher net investment income from higher invested asset balances. Total revenues increased$2.6 million , or 42%, to$8.8 million for First Quarter 2022 from$6.2 million for First Quarter 2021, primarily driven by net investment income that increased by$2.4 million , or 39%, mostly due to higher invested asset balances primarily reflecting the remaining proceeds from the sale of Global Preneed.
Total benefits, losses and expenses decreased
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Investments
We had total investments of$8.22 billion and$8.67 billion as ofMarch 31, 2022 andDecember 31, 2021 , respectively. Net unrealized gains on our fixed maturity securities portfolio decreased by$419.5 million during First Quarter 2022, from$311.4 million as ofDecember 31, 2021 to a net unrealized loss of$108.1 million as ofMarch 31, 2022 , primarily due to an increase inTreasury yields.
The following table shows the credit quality of our fixed maturity securities portfolio as of the dates indicated:
Fair value as of Fixed Maturity Securities by Credit Quality March 31, 2022 December 31, 2021 Aaa / Aa / A$ 3,879.2 56.3 %$ 4,066.5 56.4 % Baa 2,622.4 38.1 % 2,719.0 37.7 % Ba 299.4 4.3 % 333.7 4.6 % B and lower 86.9 1.3 % 96.1 1.3 % Total$ 6,887.9 100.0 %$ 7,215.3 100.0 % The following table shows the major categories of net investment income for the periods indicated: Three Months Ended March 31, 2022 2021 Fixed maturity securities $ 62.3$ 57.4 Equity securities 3.7 3.6 Commercial mortgage loans on real estate 3.9 1.3 Short-term investments 0.5 0.8 Other investments 17.2 14.7 Cash and cash equivalents 2.3 1.6 Total investment income 89.9 79.4 Investment expenses (3.6) (3.1) Net investment income $ 86.3$ 76.3 Net investment income increased$10.0 million , or 13%, to$86.3 million for First Quarter 2022 from$76.3 million for First Quarter 2021, primarily driven by higher invested assets in fixed maturity securities and commercial mortgage loans on real estate and increases in Other investments related to higher sales and valuations. Net realized losses on investments and fair value changes to equity securities were$62.4 million for First Quarter 2022 compared to net gains of$0.8 million for First Quarter 2021. First Quarter 2022 was mostly due to$55.0 million of net unrealized losses from changes in fair value of equity securities that were driven by a$45.8 million decrease in net unrealized gains from four equity positions that went public in 2021 through SPAC mergers and a$17.9 million decrease in net unrealized gains from preferred stocks mostly related to an increase in interest rates, partially offset by$10.0 million of unrealized gains from an equity security accounted for under the measurement alternative in connection with a market observable event that occurred in First Quarter 2022. The net realized losses were also driven by a$21.5 million increase in net realized losses on sales of fixed maturity securities that was partially offset by a$10.9 million increase in net realized gains on sales of equity securities.
As of
For more information on our investments, see Notes 7 and 8 to the Consolidated Financial Statements included elsewhere in this Report.
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Liquidity and Capital Resources
Management believes that we will have sufficient liquidity to satisfy our needs over the next twelve months, including the ability to pay interest on our debt and dividends on our common stock.
Regulatory Requirements
Assurant, Inc. is a holding company and, as such, has limited direct operations of its own. Our assets consist primarily of the capital stock of our subsidiaries. Accordingly, our future cash flows depend upon the availability of dividends and other statutorily permissible payments from our subsidiaries, such as payments under our tax allocation agreement and under management agreements with our subsidiaries. Our subsidiaries' ability to pay such dividends and make such other payments is regulated by the states and territories in which our subsidiaries are domiciled. These dividend regulations vary from jurisdiction to jurisdiction and by type of insurance provided by the applicable subsidiary, but generally require our insurance subsidiaries to maintain minimum solvency requirements and limit the amount of dividends these subsidiaries can pay to the holding company. See "Item 1-Business-Regulation-U.S. Insurance Regulation" and "Item 1A-Risk Factors-Legal and Regulatory Risks-Changes in insurance regulation may reduce our profitability and limit our growth" in our 2021 Annual Report. Along with solvency regulations, the primary driver in determining the amount of capital used for dividends from insurance subsidiaries is the level of capital needed to maintain desired financial strength ratings fromA.M. Best Company ("A.M. Best"). For the year endingDecember 31, 2022 , the maximum amount of dividends our regulatedU.S. domiciled insurance subsidiaries could pay us, under applicable laws and regulations currently in effect and without prior regulatory approval, is approximately$475.3 million . In addition, our international and non-insurance subsidiaries provide additional sources of dividends.
Regulators or rating agencies could become more conservative in their methodology and criteria, increasing capital requirements for our insurance subsidiaries or the enterprise.
Holding Company
As ofMarch 31, 2022 , we had approximately$737.6 million in holding company liquidity, which was$512.6 million above our targeted minimum level of$225.0 million . The target minimum level of holding company liquidity, which can be used for unforeseen capital needs at our subsidiaries or liquidity needs at the holding company, is calibrated based on approximately one year of corporate operating and interest expenses. We use the term "holding company liquidity" to represent the portion of cash and other liquid marketable securities held atAssurant, Inc. , out of a total of$857.1 million of holding company investment securities and cash, which we are not otherwise holding for a specific purpose as of the balance sheet date. We can use such assets for stock repurchases, stockholder dividends, acquisitions and other corporate purposes. Dividends or returns of capital paid by our subsidiaries, net of infusions and excluding amounts used for acquisitions or received for dispositions, were$129.1 million for Three Months 2022. In 2021, dividends, net of infusions and excluding amounts used for acquisitions or received for dispositions, were$728.6 million (including approximately$12.0 million of dividends from subsidiaries, net of infusions, included in the disposed Global Preneed business). We use these cash inflows primarily to pay holding company operating expenses, to make interest payments on indebtedness, to make dividend payments to our common stockholders, to fund investments and acquisitions, and to repurchase our common stock. From time to time, we may also seek to purchase outstanding debt in open market repurchases or privately negotiated transactions.
Dividends and Repurchases
During Three Months 2022, we made common stock repurchases and paid common stock
dividends of
We paid dividends of
Any determination to pay future dividends on our outstanding common stock will be at the discretion of the Board and will be dependent upon various factors, including: our subsidiaries' payments of dividends and other statutorily permissible payments to us; our results of operations and cash flows; our financial condition and capital requirements; general business conditions and growth prospects; any legal, tax, regulatory and contractual restrictions on the payment of dividends; and any other factors the Board deems relevant. The Credit Facility also contains limitations on our ability to pay dividends to our stockholders and repurchase capital stock if we are in default, or such dividend payments or repurchases would cause us to be in default, of our obligations thereunder. In addition, if we elect to defer the payment of interest on our 7.00% Fixed-to-Floating Rate Subordinated Notes dueMarch 2048 or our 5.25% Subordinated Notes dueJanuary 2061 (refer to "-Senior and Subordinated Notes" below), we generally may not make payments on or repurchase any shares of our capital stock. During Three Months 2022, we repurchased 1,480,000 shares of our outstanding common stock at a cost of$242.4 million , exclusive of commissions. InMay 2021 , the Board authorized a share repurchase program for up to$900.0 million , 37
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respectively, of our outstanding common stock. As of
We expect to deploy capital primarily to support business growth by funding investments, mergers and acquisitions and returning capital to shareholders in the form of share repurchases and dividends, subject to Board approval and market conditions. As previously announced, we intend to return$900.0 million of the Global Preneed net proceeds through share repurchases within one year of closing. ThroughMarch 31, 2022 , we have completed approximately 85% of the$900.0 million in share repurchases. For additional information, refer to Note 4 to the Consolidated Financial Statements included elsewhere in this Report.
Assurant Subsidiaries
The primary sources of funds for our subsidiaries consist of premiums and fees collected, proceeds from the sales and maturity of investments and net investment income. Cash is primarily used to pay insurance claims, agent commissions, operating expenses and taxes. We generally invest our subsidiaries' excess funds in order to generate investment income. We conduct periodic asset liability studies to measure the duration of our insurance liabilities, to develop optimal asset portfolio maturity structures for our significant lines of business and ultimately to assess that cash flows are sufficient to meet the timing of cash needs. These studies are conducted in accordance with formal company-wide Asset Liability Management guidelines. To complete a study for a particular line of business, models are developed to project asset and liability cash flows and balance sheet items under a large, varied set of plausible economic scenarios. These models consider many factors including the current investment portfolio, the required capital for the related assets and liabilities, our tax position and projected cash flows from both existing and projected new business. For risks related to modeling, see "Item 1A - Risk Factors - Financial Risks -Actual results may differ materially from the analytical models we use to assist in our decision-making in key areas such as pricing, catastrophe risks, reserving and capital management." in our 2021 Annual Report. Alternative asset portfolio structures are analyzed for significant lines of business. An investment portfolio maturity structure is then selected from these profiles given our return hurdle and risk appetite. Scenario testing of significant liability assumptions and new business projections is also performed. Our liabilities generally have limited policyholder optionality, which means that the timing of payments is generally insensitive to the interest rate environment. In addition, our investment portfolio is largely comprised of highly liquid fixed maturity securities with a sufficient component of such securities invested that are near maturity which may be sold with minimal risk of loss to meet cash needs. Generally, our subsidiaries' premiums, fees and investment income, along with planned asset sales and maturities, provide sufficient cash to pay claims and expenses. However, there may be instances when unexpected cash needs arise in excess of that available from usual operating sources. In such instances, we have several options to raise needed funds, including selling assets from the subsidiaries' investment portfolios, using holding company cash (if available), issuing commercial paper, or drawing funds from the Credit Facility (as defined below). 38
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Senior and Subordinated Notes
The following table shows the principal amount and carrying value of our
outstanding debt, less unamortized discount and issuance costs as applicable, as
of
March 31, 2022 December 31, 2021 Principal Amount Carrying Value Principal Amount Carrying Value
4.20% Senior Notes due
299.1 $ 300.0 $ 299.0
4.90% Senior Notes due
300.0 297.5 300.0 297.5 3.70% Senior Notes due February 2030 350.0 347.4 350.0 347.3 2.65% Senior Notes due January 2032 350.0 346.5 350.0 346.4 6.75% Senior Notes due February 2034 275.0 272.4 275.0 272.4 7.00% Fixed-to-Floating Rate Subordinated Notes due March 2048 400.0 396.1 400.0 395.9 5.25% Subordinated Notes due January 2061 250.0 244.0 250.0 244.0 Total Debt$ 2,203.0 $ 2,202.5 In the next five years, we have one upcoming debt maturity inSeptember 2023 when the 4.20% Senior Notes with an aggregate outstanding principal amount of$300.0 million will become due and payable.
Credit Facility and Commercial Paper Program
We have a$500.0 million five-year senior unsecured revolving credit facility (the "Credit Facility") with a syndicate of banks arranged byJPMorgan Chase Bank, N.A . andWells Fargo Bank, National Association . The Credit Facility provides for revolving loans and the issuance of multi-bank, syndicated letters of credit and letters of credit from a sole issuing bank in an aggregate amount of$500.0 million , which may be increased up to$700.0 million . The Credit Facility is available untilDecember 2026 , provided we are in compliance with all covenants. The Credit Facility has a sublimit for letters of credit issued thereunder of$50.0 million . The proceeds from these loans may be used for our commercial paper program or for general corporate purposes.
We made no borrowings using the Credit Facility during Three Months 2022 and no
loans were outstanding as of
Our commercial paper program requires us to maintain liquidity facilities either in an available amount equal to any outstanding notes from the program or in an amount sufficient to maintain the ratings assigned to the notes issued from the program. Our commercial paper is rated AMB-1 byA.M. Best , P-3 by Moody's and A-2 by S&P. Our subsidiaries do not maintain commercial paper or other borrowing facilities. This program is currently backed up by the Credit Facility, of which$495.5 million out of the$500.0 million was available as ofMarch 31, 2022 , due to$4.5 million of letters of credit outstanding. We did not use the commercial paper program during Three Months 2022 and there were no amounts relating to the commercial paper program outstanding as ofMarch 31, 2022 . 39
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Cash Flows
We monitor cash flows at the consolidated, holding company and subsidiary levels. Cash flow forecasts at the consolidated and subsidiary levels are provided on a monthly basis, and we use trend and variance analyses to project future cash needs making adjustments to the forecasts when needed.
The table below shows our net cash flows for the periods indicated:
For the Three Months Ended March 31, Net cash provided by (used in): 2022 2021 Operating activities - continuing operations$ (501.1) $ (468.3) Operating activities - discontinued operations - 49.6 Operating activities (501.1) (418.7) Investing activities - continuing operations (13.3) 63.2 Investing activities - discontinued operations - (48.7) Investing activities (13.3) 14.5 Financing activities - continuing operations (277.5) (153.0) Financing activities - discontinued operations - - Financing activities (277.5) (153.0)
Effect of exchange rate changes on cash and cash equivalents - continuing operations
(4.1) -
Effect of exchange rate changes on cash and cash equivalents - discontinued operations
- 0.2 Effect of exchange rate changes on cash and cash equivalents (4.1) 0.2 Net change in cash$ (796.0) $ (557.0) We typically generate operating cash inflows from premiums collected from our insurance products, fees received for services and income received from our investments while outflows consist of policy acquisition costs, benefits paid and operating expenses. These net cash flows are then invested to support the obligations of our insurance products and required capital supporting these products. Our cash flows from operating activities are affected by the timing of premiums, fees, and investment income received and expenses paid. Net cash used in operating activities from continuing operations was$501.1 million for Three Months 2022 compared to net cash used in operating activities from continuing operations of$468.3 million for Three Months 2021. Net cash used in operating activities for both First Quarter 2022 and First Quarter 2021 was driven by our mobile operations due to timing from both a reduction in premium and fees collected during the period as well as an increase in payments to various vendors for the acquisition of mobile devices used to meet insurance claims or generate profits through sales to third parties. The increase in net cash used in operations was impacted by the growth in our mobile business due to expanded relationships and our recently launched service and repair capabilities, partially offset by a reduction in commission payments also due to timing. Net cash used in operations for First Quarter 2021 included certain follow-on commission payments associated with fourth quarter 2020 premiums. Net cash used in investing activities from continuing operations was$13.3 million for Three Months 2022 compared to net cash provided by investing activities from continuing operations of$63.2 million for Three Months 2021. The change in cash flows from investing activities was primarily driven by the ongoing management of our investment portfolio. Additionally, net cash provided by investing activities for First Quarter 2021 included a$60.1 million net cash outflow for transfers from the disposal business to the continuing operations related to investments that were not included in the sale. Net cash used in financing activities from continuing operations was$277.5 million for Three Months 2022 compared to net cash used in financing activities from continuing operations of$153.0 million for Three Months 2021. The increase in net cash used in financing activities was mainly due to a$188.0 million increase in share repurchases, mainly funded using the net proceeds from the Global Preneed sale. This was partially offset by a$50.0 million repayment of our Floating Rate Senior Notes dueMarch 2021 in First Quarter 2021. 40
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The table below shows our cash outflows for interest and dividends for the periods indicated: For the Three Months Ended March 31, 2022 2021 Interest paid on debt $ 52.1$ 50.5 Common stock dividends 37.4 38.2 Preferred stock dividends - 4.7 Total $ 89.5$ 93.4 Letters of Credit In the normal course of business, letters of credit are issued primarily to support reinsurance arrangements in which we are the reinsurer. These letters of credit are supported by commitments under which we are required to indemnify the financial institution issuing the letter of credit if the letter of credit is drawn. We had$7.2 million of letters of credit outstanding as ofMarch 31, 2022 andDecember 31, 2021 .
Off-Balance Sheet Arrangements
The Company does not have any off-balance sheet arrangements that are reasonably likely to have a material effect on the financial condition, results of operations, liquidity or capital resources of the Company.
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