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MarketScreener Homepage  >  Equities  >  Nyse  >  Assurant, Inc.    AIZ

ASSURANT, INC.

(AIZ)
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ASSURANT : Management's Discussion and Analysis of Financial Condition and Results of Operations (form 10-Q)

11/05/2020 | 04:10pm EST
(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 ended December 31,
2019 and accompanying notes included in our Annual Report on Form 10-K for the
year ended December 31, 2019 (the "2019 Annual Report") filed with the U.S.
Securities and Exchange Commission (the "SEC") and the unaudited consolidated
financial statements for the three and nine months ended September 30, 2020 and
accompanying notes (the "Consolidated Financial Statements") included elsewhere
in this Quarterly Report on Form 10-Q (this "Report").
Some of the statements included in this MD&A and elsewhere in this Report,
particularly those with respect to the proposed HYLA Mobile acquisition and
process to explore strategic alternatives for our Global Preneed segment,
including our financial plans and any statements regarding our anticipating
future financial performance, business prospects, growth and operating
strategies and similar matters, are forward-looking statements within the
meaning of the U.S. Private Securities Litigation Reform Act of 1995. We do not
have a definitive timetable to complete our review of strategic alternatives for
our Global Preneed segment and there can be no assurance that any such process
will result in a transaction. You can identify these statements by the use of
words such as "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 impact of the COVID-19 pandemic, including the scope and duration of the
outbreak, government actions and restrictive measures taken in response, and its
effect on the global economic and financial markets;
(ii)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 those parties facing financial, reputational or regulatory issues;
(iii)significant competitive pressures, changes in customer preferences and
disruption;
(iv)the failure to find suitable acquisitions, integrate completed acquisitions
or grow organically, and risks associated with joint ventures and franchise
ownership and operations;
(v)the impact of general economic, financial market and political conditions,
including unfavorable conditions in the capital and credit markets and in the
markets in which we operate, including as a result of COVID-19;
(vi)risks related to our international operations, including the United
Kingdom's withdrawal from the European Union, or fluctuations in exchange rates;
(vii)the impact of catastrophic and non-catastrophe losses, including as a
result of climate change;
(viii)our inability to recover should we experience a business continuity event,
including as a result of COVID-19;
(ix)our inability to develop and maintain distribution sources or attract and
retain sales representatives and executives with key client relationships;
(x)the failure to manage vendors and other third parties on whom we rely to
conduct business and provide services to our clients;
(xi)declines in the value of mobile devices, the risk of guaranteed buybacks or
export compliance risk in our mobile business;
(xii)negative publicity relating to our products and services or the markets in
which we operate;
(xiii)the failure to implement our strategy and to attract and retain key
personnel, including senior management;
(xiv)employee misconduct;
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(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 or corporate senior debt ratings;
(xvii)an impairment of goodwill or other intangible assets;
(xviii)the failure to maintain effective internal control over financial
reporting;
(xix)a decrease in the value of our investment portfolio, including due to
market, credit and liquidity risks, changes in interest rates and COVID-19;
(xx)the impact of U.S. tax reform legislation and impairment of deferred tax
assets;
(xxi)the unavailability or inadequacy of reinsurance coverage and the credit
risk of reinsurers, including those to whom we have sold business through
reinsurance;
(xxii)the credit risk of some of our agents, third-party administrators and
clients;
(xxiii)the inability of our subsidiaries to pay sufficient dividends to the
holding company and limitations on our ability to declare and pay dividends,
including as a result of COVID-19;
(xxiv)changes in the method for determining LIBOR or the replacement of LIBOR;
(xxv)the failure to effectively maintain and modernize our information
technology systems and infrastructure, or the failure to integrate those of
acquired businesses;
(xxvi)breaches of our information systems or those of third parties with whom we
do business, or the failure to protect data in such systems, including due to
cyber-attacks and as a result of working remotely during the COVID-19 pandemic;
(xxvii)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 and data protection;
(xxviii)the impact from litigation and regulatory actions, including those
arising from COVID-19;
(xxix)reductions or deferrals in the insurance premiums we charge, including as
a result of COVID-19; and
(xxx)changes in insurance and other regulation, including to mitigate the impact
of COVID-19.
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
2019 Annual Report, and "Item 1A-Risk Factors" below and in our 2019 Annual
Report.
General
As of September 30, 2020, the Company had four reportable segments, which are
defined based on the nature of the products and services offered:
•Global Lifestyle: provides mobile device solutions and extended service
products and related services for consumer electronics and appliances (referred
to as "Connected Living"); vehicle protection and related services (referred to
as "Global Automotive"); and credit and other insurance products (referred to as
"Global Financial Services and Other");
•Global Housing: provides 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");
•Global Preneed: provides pre-funded funeral insurance, final need insurance and
related services; and
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•Corporate and Other: includes activities of the holding company, financing and
interest expenses, net realized gains (losses) on investments (which includes
unrealized gains (losses) on equity securities and changes in fair value of
direct investments in collateralized loan obligations), interest income earned
from short-term investments held, income (expenses) primarily related to the
Company's frozen benefit plans, amounts related to businesses previously
disposed of through reinsurance and the run-off of the Assurant Health business.
Corporate and Other also includes the foreign currency gains (losses) from
remeasurement of monetary assets and liabilities, changes in the fair value of
derivative instruments and other expenses related to merger and acquisition
activities, as well as other highly variable or unusual items other than
reportable catastrophes (reportable catastrophe losses, net of reinsurance and
client profit sharing adjustments, and including reinstatement and other
premiums).
The following discussion covers the three and nine months ended September 30,
2020 ("Third Quarter 2020" and "Nine Months 2020") and the three and nine months
ended September 30, 2019 ("Third Quarter 2019" and "Nine Months 2019").
Executive Summary
COVID-19
  While continuing to evolve, the COVID-19 pandemic has caused significant
global economic and financial market disruption, resulting in increased
financial market volatility, business and operational challenges such as the
temporary closures of businesses, and overall diminished expectations for the
economy and the financial markets.
  Toward the end of the first quarter of 2020 and into the second quarter of
2020, the pandemic impacted each of our operating segments and may continue to
impact our businesses if similar conditions continue to persist or worsen.
Overall, in Third Quarter 2020, we believe COVID-19 had a modest negative impact
on our net income, mainly due to lower investment income from lower yields. Our
investment portfolio will continue to be impacted by COVID-19 and related
financial market volatility. Though we generally believe our portfolio remains
well diversified and high-quality, with the majority comprised of investment
grade fixed maturity assets, interest rates are expected to remain relatively
low for the foreseeable future. Refer to "-Investments" below and Note 11 to the
Consolidated Financial Statements included elsewhere in this Report.
Our Response to COVID-19
As a global organization, we actively monitor the developments of the
continuously evolving situation resulting from COVID-19. Throughout this period
of uncertainty, we have acted swiftly and deliberately to safeguard our
employees, to maintain business operations and service levels for customers, and
to support our local communities. Since implementing restrictions on
non-essential business travel and transitioning the vast majority of our
workforce to work-from-home, we have approved a limited return to office within
certain Asian and European locations, as well as limited, essential business
travel. For those employees who need to work in our offices or global
facilities, we've maintained safety and hygiene protocols, such as social
distancing, mandatory use of personal protection equipment and regular cleaning
and disinfecting of our locations. To support our employees, we have implemented
additional floating holidays, a one-time COVID-19 relief payment for eligible
work-from-home employees and incentive bonuses for eligible on-site employees,
as well as increased well-being and mental health support services. We offered
financial support through a special COVID-19 Emergency Relief Program to
eligible employees who experienced severe financial hardship caused by the
pandemic. We also have been active in maintaining our support within our local
communities through charitable contributions.
Evaluation of Business Trends, Capital and Liquidity
We have run multiple scenarios based on the potential duration and severity of
this crisis to better understand how our business might perform and
stress-tested our capital, cash flows and liquidity. Our business has performed
on the high-end of the scenarios, demonstrating its overall resilience.
Although in late March and through April, our businesses experienced a reduction
in new sales across our Multifamily Housing and Global Automotive lines of
business, as well as Global Preneed, these trends have generally reversed
through the end of Third Quarter 2020. Our mobile business experienced lower
trade-in activity and slower sales growth, which also improved through the end
of Third Quarter 2020. We believe we have benefitted from our installed customer
base across Connected Living, Global Automotive, Multifamily Housing and Global
Preneed.
Third Quarter 2020 Global Lifestyle results were modestly impacted by
COVID-19-related factors, including more favorable international claims activity
in Connected Living and Global Automotive and lower expenses, offset by lower
investment income and foreign exchange impacts. We expect that claims activity
in Connected Living and Global Automotive will continue to normalize in the
fourth quarter of 2020. We also expect investment income to be impacted from
lower investment yields coming from new business. Throughout Global Lifestyle,
we may also continue to see adverse fluctuations in foreign exchange.
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Third Quarter 2020 Global Housing results were modestly impacted by
COVID-19-related factors, including lower real estate owned ("REO") volumes in
Lender-placed Insurance and lower investment income, partially offset by lower
expenses. For Lender-placed Insurance, we will continue to monitor the state of
the overall housing market and the potential impact of the current mortgage
moratorium, including REO volumes. Should the housing market deteriorate for a
prolonged period, we would expect a longer-term increase in our placement rates.
We also expect investment income to be impacted from lower investment yields.
For Global Preneed, sales have generally rebounded from April levels but remain
below 2019 levels. We are also monitoring mortality trends, which have
fluctuated during the pandemic, but were not a material driver of overall Global
Preneed results in the quarter. We expect longer term results to be impacted
from lower yields on new sales due to the current interest rate environment,
given the average duration of our investment portfolio.
We continue to take actions to mitigate potential impacts, including deferring
certain discretionary expenses and delaying the fulfillment of open positions in
support functions, though we expect to see increased spending in these items in
the fourth quarter of 2020, as well as in investments that had been deferred.
Throughout this period, we believe our liquidity has remained strong. As of
September 30, 2020, we had $460.3 million of holding company liquidity.
For a discussion of the material risks relating to COVID-19 on our business,
results of operations and financial condition, refer to the risk factor
disclosed in Item 8.01 of our Current Report on Form 8-K filed on May 5, 2020
and "Item 1A-Risk Factors-The value of our deferred tax assets could become
impaired, which could materially and adversely affect our results of operations
and financial condition" in our 2019 Annual Report.
Global Preneed Goodwill Impairment and Review of Strategic Alternatives
During Third Quarter 2020, we identified impairment indicators impacting the
fair value of Global Preneed in connection with exploring strategic alternatives
for the Global Preneed business, including the possible sale of the business, to
focus on opportunities within the broader Global Lifestyle and Global Housing
portfolio. Such impairment indicators included the evaluation of the long-term
economic performance of the segment in light of further expected decline in
interest rates from the resurgence of COVID-19 cases. As interest rates are
critical to the performance of the business, the anticipated declines in
interest rates are expected to have adverse impacts on existing business and
cause significant challenges to profitability from new business. The overall
expected adverse impact to the business in the segment was an important
indicator that triggered the requirement for an interim goodwill impairment
analysis in the Third Quarter 2020. The fair value calculated in Third Quarter
2020 was lower than the carrying value of the reporting unit, resulting in the
impairment of the entire goodwill of $137.8 million related to the Global
Preneed reporting unit. For additional information on the impairment test, refer
to Note 6 to the Consolidated Financial Statements included elsewhere in this
Report.
Iké
  In May 2020, we sold our minority interests in Iké Grupo, Iké Asistencia and
certain of their affiliates (collectively, "Iké"), terminated our obligations to
purchase the remaining shares of Iké, and settled a financial derivative that
provided an economic hedge against declines in the Mexican Peso relative to the
U.S. Dollar. These transactions resulted in net cash outflows of $85.3 million,
which included financing of $34.0 million, the proceeds from the settlement of
the derivative and transaction expenses. For additional information on this
transaction, see "-Liquidity and Capital Resources" below and Note 5 to the
Consolidated Financial Statements included elsewhere in this Report.
American Financial & Automotive Services
In May 2020, we completed our acquisition of American Financial & Automotive
Services, Inc. ("AFAS"), a provider of finance and insurance products and
services including vehicle service contracts, guaranteed asset protection
insurance and other ancillary products sold directly through a network of nearly
600 franchised dealership clients across 40 states, for total consideration of
$176.9 million. See Note 4 to the Consolidated Financial Statements included
elsewhere in this Report.
Catastrophe Reinsurance Program
In June 2020, we finalized our 2020 property catastrophe reinsurance program.
The U.S. per-event catastrophe coverage provides $930.0 million of protection in
excess of $80.0 million of retention per event. The coverage was placed with
more than 40 reinsurers that are all rated A- or better by A.M. Best.
Acquisition of HYLA Mobile
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In October 2020, we announced the signing of a definitive agreement to acquire
HYLA Mobile, a provider of smartphone software and trade-in and upgrade
services, for $325.0 million. The acquisition is expected to close by the end of
2020, subject to regulatory and other customary approvals, and to be funded
through a combination of existing cash at the holding company and new debt to be
issued before closing.
Summary of Financial Results
Consolidated net loss attributable to common stockholders decreased $24.6
million, or 41%, to $34.9 million for Third Quarter 2020 from $59.5 million for
Third Quarter 2019. The decrease was largely driven by the absence of the $124.8
million reduction in fair value of Iké, as well as improved results from our
Global Housing segment, excluding reportable catastrophes, partially offset by
the $135.6 million after-tax impairment on the Global Preneed goodwill and $51.3
million of higher after-tax reportable catastrophes for Global Housing.
Global Lifestyle segment net income increased $4.5 million, or 4%, to $106.6
million for Third Quarter 2020 from $102.1 million for Third Quarter 2019,
primarily driven by Connected Living, mainly due to mobile from continued
subscriber growth in North America and Asia Pacific, as well as improved
profitability from extended service contracts. Results were partially offset by
lower investment income and unfavorable foreign exchange, as well as lower
volumes and unfavorable loss experience in Global Financial Services and Other,
including impacts from COVID-19.
Global Lifestyle net earned premiums, fees and other income increased $55.7
million, or 3%, to $1.81 billion for Third Quarter 2020 from $1.75 billion for
Third Quarter 2019, primarily due to prior period sales in Global Automotive, as
well as continued mobile subscriber growth. The increase was partially offset by
lower mobile trade-in results, including a $39.0 million impact resulting from a
previously disclosed mobile program change, and unfavorable foreign exchange.
Global Housing segment net income decreased $28.5 million, or 69%, to $13.1
million for Third Quarter 2020 from $41.6 million for Third Quarter 2019.
Segment net income for Third Quarter 2020 included $87.0 million of reportable
catastrophes, primarily from Hurricane Laura, compared to $35.7 million of
reportable catastrophes for Third Quarter 2019. Excluding reportable
catastrophes, segment net income increased $22.8 million, primarily due to more
favorable non-catastrophe loss experience across our Specialty and Other
products and Lender-placed Insurance driven by lower claims frequency, reserve
releases related to run-off business and previously implemented underwriting
initiatives. Growth in Multifamily Housing and Specialty and Other products also
contributed to the increase.
Global Housing net earned premiums, fees and other income decreased $19.0
million, or 4%, to $491.3 million for Third Quarter 2020 from $510.3 million for
Third Quarter 2019, primarily due to expected run-off of small commercial
products and declines in Lender-placed Insurance policies in-force from the
previously disclosed financially insolvent client. The decrease was partially
offset by continued growth in Multifamily Housing and Specialty and Other
products.
Global Preneed segment net income increased $5.8 million, or 78%, to $13.2
million for Third Quarter 2020 from $7.4 million for Third Quarter 2019. Third
Quarter 2019 included a $9.9 million after-tax expense related to an out of
period adjustment for over-capitalization of deferred acquisition costs
occurring over a ten-year period. Excluding this adjustment, underlying results
decreased primarily due to lower investment income from lower yields and real
estate joint venture partnerships compared to the prior year period.
Global Preneed net earned premiums, fees and other income increased $1.1
million, or 2%, to $51.9 million for Third Quarter 2020 from $50.8 million for
Third Quarter 2019, primarily driven by prior period sales of the Final Need
product.
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, and our
ability to manage our expenses and achieve expense savings. Our results will
also depend on our ability to profitably grow our businesses, in particular our
Connected Living, Multifamily Housing and Global Automotive businesses, and
maintaining our position in our Lender-placed Insurance business and the North
American credit insurance business in Global Financial Services and Other.
Factors affecting these items, including the impact of the COVID-19 pandemic and
measures taken in response thereto, conditions in financial markets, the global
economy and the markets in which we operate, fluctuations in exchange rates,
interest rates and inflation, 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 2019 Annual Report, "Item 7-Management's Discussion and Analysis of
Financial Condition and Results of Operations-Critical Factors Affecting
Results" in our 2019 Annual Report and "-Executive Summary-COVID-19" and
"-Executive Summary-Our Response to COVID-19," above.
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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 and
Global Automotive businesses. 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. Our Lender-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 threat of disruption. See "Item 1A-Risk
Factors-Business and Competitive Risks-Significant competitive pressures,
changes in customer preferences and disruption could adversely affect our
results of operations" in our 2019 Annual Report.
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 and preferred stock.
For Nine Months 2020, net cash provided by operating activities was $901.6
million; net cash used in investing activities was $275.2 million; and net cash
used in financing activities was $296.8 million. We had $2.20 billion in cash
and cash equivalents as of September 30, 2020 as compared to $1.87 billion as of
December 31, 2019. See "-Liquidity and Capital Resources," below for further
details.
Critical Accounting Policies and Estimates
Our 2019 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
2019 Annual Report were consistently applied to the unaudited interim
Consolidated Financial Statements for Third Quarter 2020.
Recent Accounting Pronouncements
For a discussion of recent accounting pronouncements, see Note 3 to the
Consolidated Financial Statements included elsewhere in this Report.
Regulatory Matters
We are subject to extensive federal, state and international regulation and
supervision in the jurisdictions in which we do business, including insurance
holding company laws in the jurisdictions in which our insurance companies are
domiciled. For example, under applicable insurance holding company regulations,
no person may acquire a controlling interest in the Company or any of our
insurance company subsidiaries, unless such person has obtained prior regulatory
approval for such acquisition. Under these laws, "control" is presumed when any
person acquires or holds, directly or indirectly, 10% or more of our common
stock or of the voting securities of any of our insurance company subsidiaries.
To obtain approval, the proposed acquiror must file an application with the
relevant regulator, including the regulator for the insurance subsidiaries we
have established in the Netherlands for continued access to the European markets
after the transition period for the U.K.'s withdrawal from the European Union.
As previously disclosed, our insurance subsidiaries in the Netherlands have
received the necessary regulatory approvals for the Company to continue
conducting business in Europe following the end of the transition period.
For additional information, see "Item 1-Business-Regulation" in our 2019 Annual
Report.
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Results of Operations
Assurant Consolidated
Overview
The table below presents information regarding our consolidated results of
operations for the periods indicated:
                                                            For the Three Months Ended               For the Nine Months Ended
                                                                   September 30,                           September 30,
                                                              2020                2019                2020                2019
Revenues:
Net earned premiums                                      $   2,102.8$ 2,015.4$   6,223.0$ 5,952.5
Fees and other income                                          245.9              295.1                934.3              959.5
Net investment income                                          135.1              169.5                428.3              490.0
Net realized gains (losses) on investments                      16.6               14.9                (54.6)              61.5

Amortization of deferred gains on disposal of businesses 2.1

         4.4                  8.7               16.9
Total revenues                                               2,502.5            2,499.3              7,539.7            7,480.4
Benefits, losses and expenses:
Policyholder benefits                                          709.6              705.2              1,908.9            2,006.9

Amortization of deferred acquisition costs and value of business acquired

                                              946.2              869.5              2,745.7            2,462.6
Underwriting, general and administrative expenses              687.5              764.5              2,331.8            2,388.1
Goodwill impairment                                            137.8                  -                137.8                  -
Iké net losses                                                     -              121.1                  5.9              130.5
Interest expense                                                25.5               32.2                 77.7               85.2
Loss on extinguishment of debt                                     -               31.4                    -               31.4
Total benefits, losses and expenses                          2,506.6            2,523.9              7,207.8            7,104.7
(Loss) income before provision for income taxes                 (4.1)             (24.6)               331.9              375.7
Provision for income taxes                                      26.4               28.6                 28.2              117.7
Net (loss) income                                              (30.5)             (53.2)               303.7              258.0

Less: Net loss (income) attributable to non-controlling interest

                                                         0.3               (1.6)                (1.1)              (3.0)
Net (loss) income attributable to stockholders                 (30.2)             (54.8)               302.6              255.0
Less: Preferred stock dividends                                 (4.7)              (4.7)               (14.0)             (14.0)

Net (loss) income attributable to common stockholders $ (34.9)

$ (59.5)$ 288.6$ 241.0



For the Three Months Ended September 30, 2020 Compared to the Three Months Ended
September 30, 2019
Net Loss Attributable to Common Stockholders
Consolidated net loss attributable to common stockholders decreased $24.6
million, or 41%, to $34.9 million for Third Quarter 2020 from $59.5 million loss
for Third Quarter 2019. The decrease in net loss was primarily due to the
absence of certain events that occurred in Third Quarter 2019, mainly a $124.8
million after-tax loss related to a decrease in the estimated fair value of Iké,
$29.6 million of after-tax debt related charges associated with refinancing debt
at a lower interest rate and a $9.9 million after-tax expense related to an out
of period adjustment in our Global Preneed segment for over-capitalization of
deferred acquisition costs occurring over a ten-year period. Additionally, the
decrease in net loss was due to improved results from our Global Housing
segment, excluding reportable catastrophes, due to more favorable
non-catastrophe loss experience across our Specialty and Other products and
Lender-placed Insurance driven by lower claims frequency, previously implemented
underwriting initiatives and reserve releases related to run-off business, and a
$9.7 million of income, net of certain exit costs, from the sale of our CLO
asset management platform. The decrease in net loss was partially offset by the
$135.6 million after-tax impairment on the Global Preneed goodwill and $51.3
million of higher after-tax reportable catastrophes for Global Housing.
For the Nine Months Ended September 30, 2020 Compared to the Nine Months Ended
September 30, 2019
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Net Income Attributable to Common Stockholders
Consolidated net income attributable to common stockholders increased $47.6
million, or 20%, to $288.6 million for Nine Months 2020 from $241.0 million for
Nine Months 2019. Net income for Nine Months 2020 included $109.9 million of
reportable catastrophes, primarily related to Hurricane Laura, compared to $41.4
million in Nine Months 2019. Excluding reportable catastrophes, net income
increased $116.1 million, or 41%, due to the absence of a $131.4 million
after-tax loss related to a decrease in the estimated fair value of Iké that was
recorded in Nine Months 2019, an $84.4 million tax benefit related to the
utilization of net operating losses in connection with the CARES Act, an
improvement in our results from Global Housing and Global Lifestyle as well as
the absence of $29.6 million of after-tax debt related charges from Nine Months
2019. These increases were partially offset by the $135.6 million after-tax
impairment on the Global Preneed goodwill and a $67.7 million after-tax decrease
in net unrealized gains from changes in fair value of our equity securities and
collateralized loan obligations that included $34.4 million of after-tax net
unrealized losses for Nine Months 2020 compared to $33.3 million of after-tax
net unrealized gains for Nine Months 2019.



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Global Lifestyle
Overview
The table below presents information regarding the Global Lifestyle segment's
results of operations for the periods indicated:
                                                           For the Three Months Ended               For the Nine Months Ended
                                                                  September 30,                           September 30,
                                                             2020                2019                2020                2019
Revenues:
Net earned premiums                                     $   1,633.2$ 1,525.1$   4,799.0$ 4,499.1
Fees and other income                                         171.8              224.2                721.6              740.9
Net investment income                                          44.6               62.1                143.5              177.5
Total revenues                                              1,849.6            1,811.4              5,664.1            5,417.5
Benefits, losses and expenses:
Policyholder benefits                                         365.4              392.1              1,044.7            1,152.2

Amortization of deferred acquisition costs and value of business acquired

                                             870.5              791.9              2,519.7            2,238.4
Underwriting, general and administrative expenses             480.8              496.6              1,649.4            1,622.6
Total benefits, losses and expenses                         1,716.7            1,680.6              5,213.8            5,013.2
Segment income before provision for income taxes              132.9              130.8                450.3              404.3
Provision for income taxes                                     26.3               28.7                101.0               92.3
Segment net income                                      $     106.6

$ 102.1$ 349.3$ 312.0 Net earned premiums, fees and other income: Connected Living (mobile and service contracts) $ 909.5

$ 931.9$ 2,914.4$ 2,764.6Global Automotive

                                             802.5              706.9              2,311.0            2,131.9
Global Financial Services and Other                            93.0              110.5                295.2              343.5
Total                                                   $   1,805.0$ 1,749.3$   5,520.6$ 5,240.0
Net earned premiums, fees and other income:
Domestic                                                $   1,335.4$ 1,237.6$   4,080.2$ 3,680.0
International                                                 469.6              511.7              1,440.4            1,560.0
Total                                                   $   1,805.0$ 1,749.3$   5,520.6$ 5,240.0


For the Three Months Ended September 30, 2020 Compared to the Three Months Ended
September 30, 2019
Net Income
Segment net income increased $4.5 million, or 4%, to $106.6 million for Third
Quarter 2020 from $102.1 million for Third Quarter 2019. The increase was
primarily driven by our Connected Living business, mainly due to mobile due to
subscriber growth in North America and Asia Pacific, as well as improved
profitability from extended service contracts. This was partially offset by a
reduction in investment income and unfavorable foreign exchange. The increase
was further offset by lower income in our Global Financial Services and Other
business, mainly due to lower volumes, including anticipated declines from
business in run-off, and higher loss experience.
Total Revenues
Total revenues increased $38.2 million, or 2%, to $1.85 billion for Third
Quarter 2020 from $1.81 billion for Third Quarter 2019. Net earned premiums
increased $108.1 million, or 7%, primarily due to continued growth from prior
period production in our Global Automotive business and growth in our Connected
Living business, mainly due to growth in extended service contract programs and
continued subscriber growth from mobile protection programs. These increases in
net earned premiums were partially offset by unfavorable foreign exchange and a
decrease in our Global Financial Services and Other business, mainly due to
domestic business in run-off. Fees and other income declined $52.4 million, or
23%, primarily due to declines in our Connected Living business, mainly driven
by lower mobile trade-in results from our repairs and logistics business,
including a $39.0 million impact resulting from a previously disclosed mobile
program contract change. Net investment income declined $17.5 million, or 28%,
primarily due to lower cash yields, lower income from real estate and lower
yielding new money bond purchases.
                                       52
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Total Benefits, Losses and Expenses
Total benefits, losses and expenses increased $36.1 million, or 2%, to $1.72
billion for Third Quarter 2020 from $1.68 billion for Third Quarter 2019. The
increase was primarily due to a $78.6 million, or 10%, increase in amortization
of deferred acquisition costs and value of business acquired, mainly related to
prior period growth from our Global Automotive business. The increase was
partially offset by a decrease in policyholder benefits of $26.7 million, or 7%,
primarily due to lower global losses in our Global Automotive business, driven
in part by COVID-19. This increase was also partially offset by a decrease in
underwriting, general and administrative expenses of $15.8 million, or 3%,
primarily due to a mobile program contract change and lower trade-in volumes in
our domestic repairs and logistics business and favorable foreign exchange,
partially offset by growth in our mobile protection and extended service
contract programs within our Connected Living business and growth in our Global
Automotive business.
For the Nine Months Ended September 30, 2020 Compared to the Nine Months Ended
September 30, 2019
Net Income
Segment net income increased $37.3 million, or 12%, to $349.3 million for Nine
Months 2020 from $312.0 million for Nine Months 2019, and included a $6.7
million after-tax benefit for a client recoverable in our Connected Living
business. Excluding this item, the increase in net income was mostly driven by
our Connected Living business, primarily due to continued mobile subscriber
growth in North America and Asia Pacific and improved profitability from
extended service contracts. The increase was also due to higher income and
organic growth in our Global Automotive business, as well as $9.2 million of
client benefits. These increases were partially offset by lower income in our
Global Financial Services and Other business mainly due to lower volumes, higher
loss experience, and anticipated declines from domestic business in run-off. The
increase was further offset by a reduction in net investment income due to lower
cash yields, lower income from real estate and lower yielding new money bond
purchases and unfavorable foreign exchange volatility.
Total Revenues
Total revenues increased $246.6 million, or 5%, to $5.66 billion for Nine Months
2020 from $5.42 billion for Nine Months 2019. Net earned premiums increased
$299.9 million, or 7%, primarily driven by continued growth from prior period
production in our Global Automotive business and growth in our Connected Living
business, mainly due to growth in extended service contract programs and
continued subscriber growth from mobile protection programs. These increases in
net earned premiums were partially offset by unfavorable foreign exchange and a
decrease in our Global Financial Services and Other business, mainly due to
domestic business in run-off. Fees and other income decreased $19.3 million, or
3%, primarily due to lower mobile trade-in results, including a $39 million
impact resulting from a previously disclosed mobile program contract change,
partially offset by an $11.1 million benefit for a client recoverable in our
Connected Living business. Investment income decreased $34.0 million, or 19%,
primarily due to lower cash yields, lower income from real estate, lower
yielding new money bond purchases and unfavorable foreign exchange volatility.
Total Benefits, Losses and Expenses
Total benefits, losses and expenses increased $200.6 million, or 4%, to $5.21
billion for Nine Months 2020 from $5.01 billion for Nine Months 2019, primarily
driven by amortization of deferred acquisition costs and value of business
acquired, which increased $281.3 million, or 13%, primarily due to growth from
our Global Automotive and Connected Living businesses. Underwriting, general and
administrative expenses increased $26.8 million, or 2%, primarily due to growth
in our mobile protection and extended service contract programs within our
Connected Living business and growth in our Global Automotive business,
partially offset by a mobile program contract change in our domestic repairs and
logistics business and favorable foreign exchange. These increases were
partially offset by a decrease in policyholder benefits of $107.5 million, or
9%, mostly due to a favorable mix of mobile business, lower loss experience
within our Connected Living and Global Automotive businesses, in part due to
COVID-19, and favorable foreign exchange, partially offset by an increase from
growth in our Connected Living business.
                                       53
--------------------------------------------------------------------------------

Global Housing
Overview
The table below presents information regarding the Global Housing segment's
results of operations for the periods indicated:
                                                         For the Three Months Ended             For the Nine Months Ended
                                                                September 30,                         September 30,
                                                            2020              2019               2020                2019
Revenues:
Net earned premiums                                     $   453.6$ 475.2$   1,374.6$ 1,407.1
Fees and other income                                        37.7             35.1                106.0              113.3
Net investment income                                        16.5             22.4                 54.9               66.6
Total revenues                                              507.8            532.7              1,535.5            1,587.0
Benefits, losses and expenses:
Policyholder benefits                                       272.8            245.8                651.9              652.5

Amortization of deferred acquisition costs and value of business acquired

                                            56.8             47.3                169.9              158.7
Underwriting, general and administrative expenses           162.2            187.6                496.6              541.6
Total benefits, losses and expenses                         491.8            480.7              1,318.4            1,352.8
Segment income before provision for income taxes             16.0             52.0                217.1              234.2
Provision for income taxes                                    2.9             10.4                 44.4               48.4
Segment net income                                      $    13.1$  41.6$     172.7$   185.8
Net earned premiums, fees and other income:
Lender-placed Insurance                                 $   258.2$ 275.6$     787.5$   831.6
Multifamily Housing                                         117.9            108.7                338.1              319.3
Specialty and Other                                         115.2            126.0                355.0              369.5
Total                                                   $   491.3$ 510.3$   1,480.6$ 1,520.4


For the Three Months Ended September 30, 2020 Compared to the Three Months Ended
September 30, 2019
Net Income
Segment net income decreased $28.5 million, or 69%, to $13.1 million for Third
Quarter 2020 from $41.6 million for Third Quarter 2019. Segment net income for
Third Quarter 2020 included $87.0 million of reportable catastrophes, primarily
related to Hurricane Laura, compared to $35.7 million for Third Quarter 2019.
Excluding reportable catastrophes, segment net income increased $22.8 million,
or 29%, primarily due to more favorable non-catastrophe loss experience across
Specialty and Other products and Lender-placed Insurance, driven by lower claims
frequency, reserve releases related to run-off business and previously
implemented underwriting initiatives. Higher premium rates in our Lender-placed
Insurance business, continued growth in Multifamily Housing and our Specialty
and Other products also contributed to the increase. The increase was partially
offset by declines in our Lender-placed Insurance policies in-force from a
financially insolvent client, as well as lower REO volumes as less homes are
moving to default or foreclosure due to moratoriums enacted in connection with
COVID-19.
Total Revenues
Total revenues decreased $24.9 million, or 5%, to $507.8 million for Third
Quarter 2020 from $532.7 million for Third Quarter 2019. Net earned premiums
decreased $21.6 million, or 5%, primarily due to the run-off of our small
commercial product and declines in our Lender-placed Insurance business, mainly
from the reduction of policies in-force for a financially insolvent client and
lower REO volume, partially offset by continued growth from renters insurance in
our Multifamily Housing business and premium rate increases in our Lender-placed
Insurance business. Net investment income decreased $5.9 million, or 26%,
primarily due to lower income from real estate related investments and lower
cash yields. These decreases were partially offset by an increase in fees and
other income of $2.6 million, or 7%, primarily due to an increase in installment
fees for renters insurance in our Multifamily Housing business.
                                       54
--------------------------------------------------------------------------------

Total Benefits, Losses and Expenses
Total benefits, losses and expenses increased $11.1 million, or 2%, to $491.8
million for Third Quarter 2020 from $480.7 million for Third Quarter 2019. The
increase was primarily due to an increase in total policyholder benefits of
$27.0 million, or 11%, from higher reportable catastrophe losses related to
hurricanes and wildfires across the U.S. in Third Quarter 2020, partially offset
by a decrease in non-catastrophe losses, as explained above. This increase was
partially offset by a decrease of $15.9 million, or 7%, in amortization of
deferred acquisition costs and underwriting, general and administrative
expenses, primarily due to lower employment related expenses in our
Lender-placed Insurance business.
For the Nine Months Ended September 30, 2020 Compared to the Nine Months Ended
September 30, 2019
Net Income
Segment net income decreased $13.1 million, or 7%, to $172.7 million for Nine
Months 2020 from $185.8 million for Nine Months 2019. Segment income for Nine
Months 2020 included $109.9 million of reportable catastrophes, primarily
related to Hurricane Laura, compared to $41.8 million in Nine Months 2019.
Excluding reportable catastrophes, segment net income increased $55.0 million,
or 24%, primarily driven by favorable non-catastrophe losses across all major
products, higher premium rates in our Lender-placed Insurance business, the
absence of losses from our small commercial product and lower operating expenses
in our Lender-placed Insurance business. The increase was partially offset by a
reduction in policies in-force from a financially insolvent client and lower REO
volume and fee income in our Lender-placed Insurance business.
Total Revenues
Total revenues decreased $51.5 million, or 3%, to $1.54 billion for Nine Months
2020 from $1.59 billion for Nine Months 2019. Net earned premiums decreased
$32.5 million, or 2%, primarily due to declines in our Lender-placed Insurance
business, mainly from the reduction in policies in-force for a financially
insolvent client and lower REO volume, as well as declines in our small
commercial business. This decrease was partially offset by premium rate
increases in our Lender-placed Insurance business, continued growth from renters
insurance in Multifamily Housing business, and growth from our Specialty and
Other business, mainly sharing economy products. Fees and other income decreased
$7.3 million, or 6%, primarily due to a decline in Lender-placed Insurance,
mostly due to lower loss draft volume. Net investment income decreased $11.7
million, or 18%, primarily due to lower income from real estate related
investments, lower cash yields, and a decrease in invested assets.
Total Benefits, Losses and Expenses
Total benefits, losses and expenses decreased $34.4 million, or 3%, to $1.32
billion for Nine Months 2020 from $1.35 billion for Nine Months 2019. The
decrease was primarily due to a decrease of $33.8 million, or 5%, in
amortization of deferred acquisition costs and underwriting, general and
administrative expenses, primarily due to lower employment related expenses in
our Lender-placed Insurance business. Policyholder benefits decreased
$0.6 million mainly from lower non-catastrophe losses across all major products
and the absence of losses from our small commercial product, partially offset by
higher reportable catastrophe losses.

                                       55
--------------------------------------------------------------------------------

Global Preneed
Overview
The table below presents information regarding the Global Preneed segment's
results of operations for the periods indicated:
                                                          For the Three Months Ended           For the Nine Months Ended
                                                                September 30,                        September 30,
                                                            2020               2019              2020               2019
Revenues:
Net earned premiums                                     $     16.0$  15.1$     49.4$  46.3
Fees and other income                                         35.9             35.7               106.2            103.2
Net investment income                                         70.1             73.0               210.3            212.7
Total revenues                                               122.0            123.8               365.9            362.2
Benefits, losses and expenses:
Policyholder benefits                                         71.1             67.3               211.6            202.1

Amortization of deferred acquisition costs and value of business acquired

                                             18.9             30.3                56.1             65.5
Underwriting, general and administrative expenses             15.3             18.2                48.4             49.8
Total benefits, losses and expenses                          105.3            115.8               316.1            317.4
Segment income before provision for income taxes              16.7              8.0                49.8             44.8
Provision for income taxes                                     3.5              0.6                10.6              8.7
Segment net income                                      $     13.2$   7.4$     39.2$  36.1


For the Three Months Ended September 30, 2020 Compared to the Three Months Ended
September 30, 2019
Net Income
Segment net income increased $5.8 million, or 78%, to $13.2 million for Third
Quarter 2020 from $7.4 million for Third Quarter 2019, primarily due to absence
of a $9.9 million after-tax expense related to an out of period adjustment for
over-capitalization of deferred acquisition costs occurring over a ten-year
period recorded in Third Quarter 2019. This was partially offset by a decrease
in investment income.
Total Revenues
Total revenues were relatively flat at $122.0 million for Third Quarter 2020
compared to $123.8 million for Third Quarter 2019 mostly due to decreased
investment income primarily driven by lower income from real estate. This was
partially offset by increased sales of the Final Need product.
Total Benefits, Losses and Expenses
Total benefits, losses and expenses decreased $10.5 million, or 9%, to $105.3
million for Third Quarter 2020 from $115.8 million for Third Quarter 2019.
Amortization of deferred acquisition costs and value of business acquired
decreased $11.4 million, or 38%, primarily due to the absence of a $14.2 million
expense related to an out of period adjustment for over-capitalization of
deferred acquisition costs occurring over a ten-year period in Third Quarter
2019. Underwriting, general and administrative expenses decreased $2.9 million,
or 16%, due to a decrease in general expenses. This was partially offset by an
increase in policyholder benefits of $3.8 million, or 6%, driven by growth in
the domestic preneed business.
For the Nine Months Ended September 30, 2020 Compared to the Nine Months Ended
September 30, 2019
Net Income
Segment net income increased $3.1 million, or 9%, to $39.2 million for Nine
Months 2020 from $36.1 million for Nine Months 2019, primarily due to the
absence of a $9.9 million after-tax expense related to an out of period
adjustment for over-capitalization of deferred acquisition costs occurring over
a ten-year period recorded in Nine Months 2019. This was partially offset by a
decrease in investment income and an increase in policyholder benefits driven by
growth in the domestic preneed business.
Total Revenues
                                       56
--------------------------------------------------------------------------------

Total revenues increased $3.7 million, or 1%, to $365.9 million for Nine Months
2020 from $362.2 million for Nine Months 2019, primarily due to growth in
pre-funded funeral policies in the U.S. and sales of the Final Need product.
This was offset by lower investment income driven by an increase in investment
expenses related to our strategic decision to outsource the management of our
investment portfolio, lower income from real estate and lower yielding new money
bond purchases, partially offset by an increase in invested assets.
Total Benefits, Losses and Expenses

Total benefits, losses and expenses decreased $1.3 million to $316.1 million for
Nine Months 2020 from $317.4 million for Nine Months 2019. Amortization of
deferred acquisition costs and value of business acquired decreased $9.4
million, or 14%, primarily due to the absence of a $14.2 million expense related
to an out of period adjustment for over-capitalization of deferred acquisition
costs occurring over a ten-year period in Nine Months 2019. Underwriting,
general and administrative expenses decreased $1.4 million, or 3%, due to
decrease in general expenses. This was partially offset by an increase in
policyholder benefits of $9.5 million, or 5%, driven by the growth in the
domestic preneed business.

                                       57
--------------------------------------------------------------------------------

Corporate and Other
Overview
The tables below present information regarding the Corporate and Other's segment
results of operations for the periods indicated:
                                                      For the Three Months Ended             For the Nine Months Ended
                                                             September 30,                         September 30,
                                                        2020               2019               2020               2019
Revenues:
Net earned premiums                                 $        -          $      -          $        -          $      -
Fees and other income                                      0.5               0.1                 0.5               2.1
Net investment income                                      3.9              12.0                19.6              33.2
Net realized gains (losses) on investments                16.6              14.9               (54.6)             61.5
Amortization of deferred gains on disposal of
businesses                                                 2.1               4.4                 8.7              16.9
Total revenues                                            23.1              31.4               (25.8)            113.7
Benefits, losses and expenses:
Policyholder benefits                                      0.3                 -                 0.7               0.1
General and administrative expenses                       29.2              62.1               137.4             174.1
Goodwill impairment                                      137.8                 -               137.8                 -
Iké net losses                                               -             121.1                 5.9             130.5
Interest expense                                          25.5              32.2                77.7              85.2
Loss on extinguishment of debt                               -              31.4                   -              31.4
Total benefits, losses and expenses                      192.8             246.8               359.5             421.3
Segment loss before benefit for income taxes            (169.7)           (215.4)             (385.3)           (307.6)
Benefit for income taxes                                  (6.3)            (11.1)             (127.8)            (31.7)
Segment net loss                                        (163.4)           (204.3)             (257.5)           (275.9)
Less: Net loss (income) attributable to
non-controlling interest                                   0.3              (1.6)               (1.1)             (3.0)
Net loss attributable to stockholders                   (163.1)           (205.9)             (258.6)           (278.9)
Less: Preferred stock dividends                           (4.7)             (4.7)              (14.0)            (14.0)

Net loss attributable to common stockholders $ (167.8)$ (210.6)$ (272.6)$ (292.9)



For the Three Months Ended September 30, 2020 Compared to the Three Months Ended
September 30, 2019
Net Loss Attributable to Common Stockholders
Segment net loss attributable to common stockholders decreased $42.8 million, or
20%, to $167.8 million for Third Quarter 2020 from $210.6 million for Third
Quarter 2019. The decrease in net loss was primarily due to the absence of a
$124.8 million after-tax loss related to a decrease in the estimated fair value
of Iké and $29.6 million of after-tax debt related charges associated with
refinancing debt at a lower interest rate that were both recorded in Third
Quarter 2019. The decrease in net loss was also due $10.0 million of lower net
losses from foreign exchange related to the remeasurement of net monetary assets
in Argentina, a highly inflationary currency, and a $9.7 million of income, net
of certain exit costs, from the sale of our CLO asset management platform. The
decrease in net loss was partially offset by the $135.6 million after-tax
impairment on the Global Preneed goodwill.
Total Revenues
Total revenues decreased $8.3 million, or 26%, to $23.1 million for Third
Quarter 2020 from $31.4 million for Third Quarter 2019, primarily due to an $8.1
million decrease in net investment income driven by lower income from a higher
concentration of lower yielding liquid investments for Third Quarter 2020
compared to Third Quarter 2019 and lower income from real estate.
Total Benefits, Losses and Expenses
                                       58
--------------------------------------------------------------------------------

Total benefits, losses and expenses decreased $54.0 million, or 22%, to $192.8
million for Third Quarter 2020 from $246.8 million for Third Quarter 2019,
mostly due to the absence of the $121.1 million loss related to a decrease in
the estimated fair value of Iké and $37.4 million of debt-related charges
associated with refinancing debt at a lower interest rate that were both
recorded in Third Quarter 2019. The decrease was also due to a $12.2 million
income, net of certain exit costs, from the sale of our CLO asset management
platform, $10.0 million of lower net losses from foreign change related to the
remeasurement of net monetary assets in Argentina and a $9.6 million loss on
sale of Mortgage Solutions. The decrease was partially offset by the $137.8
million impairment on the Global Preneed goodwill.
For the Nine Months Ended September 30, 2020 Compared to the Nine Months Ended
September 30, 2019
Net Loss Attributable to Common Stockholders
Segment net loss attributable to common stockholders decreased $20.3 million, or
7%, to $272.6 million for Nine Months 2020 from $292.9 million for Nine Months
2019 due to the absence of a $131.4 million of after-tax loss related to a
decrease in the estimated fair value of Iké that was recorded in Nine Months
2019, an $84.4 million tax benefit related to the utilization of net operating
losses in connection with the CARES Act and the absence of $29.6 million of
after-tax debt related charges associated with refinancing debt at a lower
interest rate from Nine Months 2019. These increases were partially offset by
the $135.6 million after-tax impairment on the Global Preneed goodwill and a
$67.7 million after-tax decrease in net unrealized gains from changes in fair
value of our equity securities and collateralized loan obligations that included
$34.4 million of after-tax net unrealized losses for Nine Months 2020 compared
to $33.3 million of after-tax net unrealized gains for Nine Months 2019, as well
as $17.3 million of after-tax direct and incremental operating expenses incurred
in connection with the COVID-19 pandemic.
Total Revenues
Total revenues decreased $139.5 million to $(25.8) million for Nine Months 2020
from $113.7 million for Nine Months 2019, primarily due to an increase in
unrealized losses on investments mostly related to a net decrease in the fair
value of our equity securities and collateralized loan obligations. The decrease
was also due to lower net investment income, driven by lower income from a
higher concentration of lower yielding liquid investments for Third Quarter 2020
compared to Third Quarter 2019 and lower income from real estate, as well as
lower amortization of deferred gains associated with the sale of Assurant
Employee Benefits.
Total Benefits, Losses and Expenses
Total benefits, losses and expenses decreased $61.8 million, or 15%, to $359.5
million for Nine Months 2020 from $421.3 million for Nine Months 2019, primarily
due to the absence of certain events that occurred in Nine Months 2019, mainly
$124.6 million of lower losses associated with Iké, $37.4 million of debt
related charges associated with refinancing debt at a lower interest rates and a
$15.6 million impairment of certain intangible assets from our acquisition of
Green Tree Insurance Agency. The decrease was also due to an $11.5 million
decrease in integration expenses associated with the TWG acquisition, $11.3
million of lower net losses from foreign exchange related to the remeasurement
of net monetary assets in Argentina and $10.8 million of income, net of certain
exit costs, from the sale of our CLO asset management platform. These decrease
were partially offset by the $137.8 million impairment on the Global Preneed
goodwill and $21.9 million of direct and incremental operating expenses incurred
in connection with the COVID-19 pandemic.

                                       59
--------------------------------------------------------------------------------

Investments

We had total investments of $15.21 billion and $14.57 billion as of September
30, 2020 and December 31, 2019, respectively. Net unrealized gains on our fixed
maturity securities portfolio increased by $459.1 million during Nine Months
2020, from $1.26 billion as of December 31, 2019 to $1.72 billion as of
September 30, 2020, primarily due to spread compression, partially offset by
decreases in foreign exchange rates in several countries.
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           September 30, 2020                           December 31, 2019
Aaa / Aa / A                                  $   8,185.0                 62.5  %       $        8,014.7                 65.1  %
Baa                                               4,274.8                 32.6  %                3,734.7                 30.3  %
Ba                                                  534.3                  4.1  %                  480.7                  3.9  %
B and lower                                         100.4                  0.8  %                   92.3                  0.7  %
Total                                         $  13,094.5                100.0  %       $       12,322.4                100.0  %

The following table shows the major categories of net investment income for the periods indicated:

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