Assurant defines itself as “a leading global provider of lifestyle and housing solutions that support, protect and connect major consumer purchases”.  The company released its 2nd Quarter 2020 results on Tuesday, August 4, and in doing so reported a Net Income of $173.5 million, which is up 24 percent from the same period in 2019.  Assurant also notes that it returned $65 million to shareholders in share repurchases and common dividends.  You can see their 2nd Quarter 2020 report here.

Here’s what Assurant President and CEO Alan Colberg said, “Our second quarter results demonstrated the resiliency of our business and the stability of our large, installed customer base, particularly in Global Lifestyle, while also benefitting from favorable non-catastrophe loss experience.”

Assurant has three divisions – Global Lifestyle, Global Housing, and Global Preneed, that they break down into individual unit revenues and operating income performance.  Those of us in the death care industry are most interested in their Global Preneed business which consists of insurance based products in the preneed industry.

For the 2nd Quarter of 2020, Assurant’s Global Preneed division reported a slight increase in revenue (Net Earned Premiums) over 2Q 2019 as the unit’s revenue for 2020 came in at $50.3 million as compared to the 2019 2Q revenue of $49.8 million. . .an increase, but a very small one.  The Global Preneed unit reported a reduction in Operating Income for 2Q 2020 as compared to 2Q 2019.  2020’s Operating Income was reported at $13.7 million as compared to 2019’s Operating Income of $16.9 million for the same quarter.  That is a drop of about 19%.

Here is what Assurant said of those numbers:

• Net operating income decreased in second quarter 2020, primarily due to lower investment income from lower yields compared to a strong prior year period, as well as higher mortality, including impacts from COVID-19.
• Net earned premiums, fees and other income increased modestly year-over-year, primarily driven by prior period sales of the Final Need product and growth in pre-funded funeral policies.

Funeral Director Daily take:  When we look at the Assurant Global Preneed business it is pretty easy to understand their operating results because of increased mortality from the premature deaths related to COVID-19.  We would expect that from most preneed companies, especially, if they cover large areas of the population.  Some companies, with only regional exposures may, depending on what areas of the country they cover, be exposed to a greater extent or to a lesser extent with COVID related death claims which will figure into their operating details.

And, I’m guessing that even during the pandemic which has caused some disruptions in preneed sales, that Assurant has a large enough book of business with monthly premiums, as compared single payment premiums, that their revenue or “Net Earned Premium” numbers can be maintained at the level they were.  That may be a big factor in why their Global Preneed revenue did not fall.

Interesting Business Milestone:  In the category that “the only thing that is constant is change” or maybe the category “that nothing lasts forever” I saw a news tidbit about the New York Times Company yesterday.  According to Wikipedia, The New York Times Company was founded in 1851 and this article from Market Watch published yesterday makes note that this past quarter was the first time in its history that revenue from digital sources has exceeded revenue from print sources.

It reminds me of the time when I sat on a regional board of Norwest Bank/Wells Fargo and I heard something similar.  Prior to every meeting

the Chair always asked those of us gathered to tell a little about what has happened in our industry.  One of my colleague board members was the CEO of Rural Cellular Corporation – a cell phone company that was acquired by Verizon in 2009 for $2.67 billion. He made the comment that the past month marked the first time in the company’s history that text messages had overtaken voice calls in number.  Quite frankly, I didn’t know what he was talking about.

This was in the early 2000’s and I had not yet heard about “text messaging”, but it was well known and in extraordinary use by the youth of America.  It wasn’t too long after that, that even I was “texting” more than I was calling.

I make this observation to simply point out, yes, things do change.  And, they will change in the death care business. . . . We’ve seen that with cremation. . .and I’m guessing we will see that in online pricing, selection of providers much more prevalent by the internet, and will see it in the growth of what we refer today as non-traditional options — such as alkaline hydrolysis, green burial,  and recomposition.

“End of life customs are more changeable than they seem.”  — Ed Bixby, President of the Green Burial Council.

Knowing that “things do change” should motivate funeral home owners and decision makers to always be looking forward to see the trends that may be emerging.

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