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Assurant Inc (AIZ) Q1 2019 Earnings Call Transcript

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Assurant Inc (NYSE: AIZ)
Q1 2019 Earnings Call
May. 7, 2019, 8:30 a.m. ET

Contents:

  • Prepared Remarks
  • Questions and Answers
  • Call Participants

Prepared Remarks:

Operator

Welcome to Assurant's First Quarter 2019 Earnings Conference Call and Webcast. At this time, all participants have been placed in a listen-only mode and the floor will be open for your questions following management's prepared remarks. (Operator Instructions)

It is now my pleasure to turn the floor over to Suzanne Shepherd, Senior Vice President of Investor Relations. You may begin.

Suzanne Shepherd -- Senior Vice President, Investor Relations

Thank you, Christina, and good morning, everyone. We look forward to discussing our First Quarter 2019 Results with you today. Joining me for Assurant's conference call are Alan Colberg, our President and Chief Executive Officer; and Richard Dziadzio, our Chief Financial Officer.

Yesterday, after the market closed, we issued a news release announcing our results for the first quarter 2019. The release and corresponding financial supplement are available on assurant.com. As noted in both documents, we updated our key financial metrics for the enterprise and our operating segments to align with the company's strategic focus, and the financial objective shared at our recent Investor Day. We believe these metrics will be a better indicator of performance going forward.

We'll start today's call with brief remarks from Alan and Richard before moving into a Q&A session. Some of the statements made today may be forward-looking. Forward-looking statements are subject to risks, uncertainties and other factors that may cause actual results to differ materially from those contemplated by these statements. Additional information regarding these factors can be found in yesterday's earnings release as well as in our SEC reports.

During today's call, we will refer to non-GAAP financial measures, which we believe are important in evaluating the Company's performance. For more details on these measures, the most comparable GAAP measures and a reconciliation of the two, please refer to yesterday's news release and financial supplement.

I will now turn the call over to Alan.

Alan B. Colberg -- President and Chief Executive Officer

Thanks, Suzanne. Good morning, everyone. Overall, we are pleased with our results for the first quarter. Performance across our three operating segments was strong, especially mobile and Global Lifestyle. Our results reaffirm our belief that we are well positioned to sustain our performance long term. Our leadership positions and innovative offerings should continue to support double-digit earnings growth, with a more diversified and higher quality mix of business.

During the quarter, we continued to execute on our strategy. In Global Housing, we've repositioned the segment for growth. First, by beginning to stabilize lender-placed and second, by continuing to drive profitable growth within multi-family housing and our other specialty property offerings. In multi-family housing, we grew revenues 7% from both our affinity and property management partners, now protecting 2.1 million renters across the US.

Our focus remains on investing in our key capabilities to deliver even more value for our clients and their renters. To that end, we continue to rollout our new point-of-lease tracking capability to seamlessly integrate our products and services, and gradually increase attachment rates. With our vertically integrated capabilities, broad product suite and emphasis on the customer experience, we've built a leading position in the PMC channel. We continue to expect strong top and bottom line growth going forward.

We've also further strengthened our leading lender-placed franchise by renewing three key partnerships in the quarter, and over the past five months, the renewals completed represent nearly one-third of our loans tracked. This bodes well for the future as lender-placed earnings have started to stabilize after years of market declines. Over the next three years, we believe we will generate a 17% to 20% operating ROE, including an average expected cat load.

In Global Lifestyle, we are aligned with leading brands to bring innovative products and services to market. In connected living, this includes services like our premium tech support, which creates greater value for the end consumer and adds new and important profitables. We now protect more than 47 million covered mobile devices, up 26% year-over-year. As we highlighted at our Investor Day, our new partnerships with companies like Verizon, Comcast, Charter, KDDI and the renewal and expansion of our T-Mobile relationship to include Metro by T-Mobile demonstrate that our vertically integrated capabilities continue to drive value for our customers and serve as a significant differentiator for Assurant.

We made additional progress integrating The Warranty Group acquisition, realizing operating synergies as planned and finding ways to unlock additional value from our stronger, more scalable global automotive business. For example, this quarter, we introduced Pocket Drive, our new technology platform that will expand our offerings beyond service contracts. We expect to launch pilot testing in the second quarter with select dealer partners. We are pleased by the continued strong revenue growth and innovation in this business for the 48 million vehicles we protect worldwide. This also supports our long-term view that we can continue to grow Global Lifestyle's net operating income at least 10% annually on average over the next three years.

Turning to Global Preneed, we produced solid, consistent earnings and cash flows in the quarter, supported by our growth from pre-funded funeral policies and favorable mortality trends. Base sales were also strong with a 7% year-over-year increase from new distribution partners within our Final Need product. Over the next three years, we believe we can achieve a sustainable operating ROE of 13% in Global Preneed.

In addition to setting these long-term segment targets at our Investor Day, we also provided several key enterprise financial objectives. Over the course of 2020 and 2021, we expect to grow earnings per share on average by 12% with double-digit expansion in net operating income. In addition, starting in 2019, we intend to return $1.35 billion to shareholders over the next three years in the form of share repurchases and common stock dividends, illustrating the confidence we have in our future cash flows. We recognize that executing against our plans for 2019 will be an important step in delivering on these long-term targets.

For this year, we continue to expect to grow operating earnings per share, excluding catastrophe losses, by 6% to 10% from the $8.65 we reported in 2018. This will be driven by double-digit earnings growth and disciplined capital deployment. Looking at results for the first quarter 2019, we reported a net operating earnings per share, excluding catastrophes, of $2.33, an increase of 9% from $2.14 in the prior year period. This was driven by earnings growth, partially offset by shares issued last year related to our TWG acquisition.

Net operating income, also excluding catastrophes, for the quarter was up 30% to $149 million, due to TWG contributions and organic business growth. At the end of March, holding company liquidity totaled $354 million, after returning $51 million in share repurchases and $37 million in common stock dividends.

Overall, we're pleased with our performance in the first quarter. We're confident in our ability to continue to expand earnings and cash flow. This will allow us to continue to invest in our business and sustain our track record of returning excess capital to shareholders over the long term.

I'll now turn the call over to Richard to review segment results and our 2019 outlook in greater detail. Richard?

Richard Dziadzio -- Executive Vice President, Chief Financial Officer

Thank you, Alan, and good morning, everyone. Let's begin with Global Housing. Net operating income for the quarter totaled $73 million, an increase of $2 million from the first quarter of 2018. Excluding mortgage solutions, in the prior year period, earnings declined as growth in multi-family housing was offset by higher catastrophe costs and decreased profitability in our specialty property offerings. Lower earnings in our specialty property offerings were mainly the result of higher non-cat loss experience in our small commercial property products. For the segment, reportable catastrophes in the quarter totaled $9 million, level with last year.

Global Housing revenue was down, reflecting the sale of mortgage solutions. Excluding mortgage solutions, revenue was up 5% due to growth in small commercial products, multi-family housing and our sharing economy offerings. Lender-placed revenue decreased due to lower placement rates, partially offset by higher premium rates. During the quarter, the placement rate declined 13 basis points year-over-year and only 2 basis points from year-end 2018, in line with our expectations.

As noted earlier, we have revised our financial supplement disclosure following Investor Day. Specifically for housing, we've aligned our key financial metrics to report the loss, expense and combined ratios for the entire segment.

For the first quarter, the combined ratio for Global Housing was unchanged from the prior year period at 86.7%. This falls within our longer-term range of 86% to 90%, including an average expected capital. For full-year 2019, we continue to expect Global Housing to realize modest earnings growth, excluding cat losses. This will be driven by continued expansion of our specialty offerings, most notably, multi-family housing.

As we look to the second quarter, we expect higher non-cat loss ratios reflecting typical weather patterns and we will monitor the elevated loss experience in the small commercial products. Lender-placed earnings will reflect the additional reinsurance coverage we secured earlier this year, but underlying profitability is expected to remain stable. We also continue the process of migrating clients to our new operating platform, as this will lower expenses longer term, and more importantly, further enhances the customer experience.

Moving to Global Lifestyle. The segment reported earnings of $101 million for the first quarter, a $45 million increase year-over-year. This reflects $30 million after-tax from TWG, including $10 million of realized synergies and $2.8 million of intangible amortization. We also benefited from strong organic growth in the business, led by connected living, which grew earnings by 54% in the quarter. This was mainly due to mobile subscriber growth from programs launched over the past two years. In addition, we realized higher trading volumes from carrier promotions and strong margins in repair and logistics.

Segment earnings were also supported by more favorable Global Automotive results for legacy Assurant, compared to the prior period, which was marked by some higher one-time expenses. Looking at total revenue for this segment, net earned premiums and fees were up $763 million, mainly from the $651 million TWG contribution. Excluding TWG, revenue was up $112 million or 12%. Organic revenue growth was driven primarily by mobile programs launched during the past two years, mainly in Asia-Pacific and North America. This growth was across various distribution channels and from multiple profit pools, including device protection, premium tech support, as well as repair and logistics.

Auto revenue, excluding TWG, was up 20%, benefiting from strong prior year period sales in our TPA distribution. Foreign exchange volatility, primarily from unfavorable currency movements in Argentina and Brazil, partially offset growth in the quarter.

Looking at the full year, we continue to expect strong earnings growth due to full-year TWG contributions, including $25 million to $30 million of incremental expense synergies, mainly in Global Automotive. In addition, mobile should remain a significant contributor, driven by organic growth from new and existing programs. It's important to note that the first quarter was particularly strong compared to last year, reflecting the timing of new phone introductions and carrier promotions. For the balance of the year, we expect typical mobile seasonality and some additional pressure from anticipated declines in our legacy credit business within financial services, investments to enhance and strengthen our capabilities, particularly in mobile and auto, will also be important as we look to stay on the forefront of innovation for the future.

Now let's move to Global Preneed. The segment reported $12 million of net operating income, a $2 million year-over-year increase. Higher investment income and lower mortality compared to the prior year period were the key drivers. Revenue in Preneed was up 6%, mainly driven by growth in US, including sales of our Final Need product. Global Preneed's outlook for the year remains unchanged with earnings roughly flat with 2018. We will continue to manage expenses closely, as we implement the segment's long-term growth strategy, drive more sales to our funeral home distribution, work with new partners and expand our portfolio of products.

At Corporate, the net operating loss was $19 million, relatively flat with the prior year period. For full-year 2019, we expect the net operating loss to be similar to 2018, creating additional leverage with our expense structure as we grow.

Turing to capital, we ended March with $354 million of holding company liquidity or about $129 million above our current minimum target level of $225 million. Dividends in the quarter from our operating segments totaled $78 million, lower than segment earnings as we typically wait until later in the year for greater visibility. In addition to our quarterly corporate and interest expenses, the outflows included $51 million in share repurchases, $42 million in common and preferred dividends and $8 million of investments, including strengthening our repair and logistic capabilities in Canada.

In the second quarter through May 3rd, we purchased an additional 224,000 shares for $21 million. For full-year 2019, we expect dividends from our operating segments to approximate segment operating earnings. These dividends should provide flexibility to invest in our businesses, and return capital to shareholders, subject to market conditions.

While our 2019 capital deployment plans take into account our potential purchase of Ike Asistencia in light of our investment in TWG, we are evaluating how Ike fits into our expanded Latin American operations. We are exploring strategic options for Ike and have delayed the put call option until February of 2020 to complete our review.

In summary, we're very pleased with our strong performance in the first quarter, we remain focused on delivering on our commitments for the full year. And with that, operator, please open the call for questions.

Questions and Answers:

Operator

The floor is now opened for questions. (Operator Instructions)

Thank you. Our first question is coming from John Nadel from UBS.

Alan B. Colberg -- President and Chief Executive Officer

Hey, good morning, John.

John Nadel -- UBS -- Analyst

Good morning. I have a couple of questions and then I'll get back in the queue. One that I'm curious about the number of renters policies, that's growing really solid double-digit year-over-year, I think the growth rate this quarter was 13%, 13.5%, but your actual net earned premium is growing high-single. Is there just a lag effect there that I'm missing or is there some pricing competition going on?

Richard Dziadzio -- Executive Vice President, Chief Financial Officer

Hey, John, good morning. It's Richard.

John Nadel -- UBS -- Analyst

Good morning.

Richard Dziadzio -- Executive Vice President, Chief Financial Officer

I think there is probably the two parts of it. I think first of all, we're expanding in the property management channel, I mean, we have really good growth and strong growth. As we said in -- Alan said in his remarks, we're investing in that channel to stay at the forefront of innovation and allowing renters to come in and on-board more quickly.

So there is some expense there. I think there's probably two-fold, I mean, we're being very competitive in the market, but also there is a lag effect between when we bring on, we are writing the premium when the premium flows through, but I would say, no big changes in margins that we've seen.

John Nadel -- UBS -- Analyst

Okay, that's helpful. And then, just one housekeeping item. Is that your outlook for 2019. I'm just curious we've seen that property reinsurance costs, particularly in the State of Florida are up pretty significantly. I just wonder whether you already knew that had that big in to your outlook or if that was more of an estimate, and is there any impact we should expect as it relates to your outlook for reinsurance costs, impacting your overall outlook for '19?

Alan B. Colberg -- President and Chief Executive Officer

Hi, John. Yeah, thanks for the question. And actually we did, I think the market had some visibility in terms of the cat cost in Florida, the cost of the hurricane -- Florida Hurricane Cat Fund. So we have a, I say a large part of that in to it. As we come into the year, might be a tiny bit higher, but nothing that would impact our outlook whatsoever.

Richard Dziadzio -- Executive Vice President, Chief Financial Officer

John, the other thing that we talked about at Investor Day, we've really expanded the multi-year component of our reinsurance, which really stabilizes cost for us over time.

John Nadel -- UBS -- Analyst

Got you, that's helpful. Thank you. And then the last one, I'm just thinking how did -- overall, how did 1Q earnings compare with your own sort of internal expectations, it sounds to me like you're signalling that, in particular, connected living had a pretty solid, maybe favorable quarter. How should we think about -- you talked about seasonality, you talk about a little bit higher loss ratios as we move from 1Q into 2Q for that particular business, how can we -- can you help us by sizing maybe in a dollar amount or a range, how we should think about that earnings of -- for connected living from 1Q to 2Q?

Alan B. Colberg -- President and Chief Executive Officer

Yeah. So, certainly, if we look at the quarter, we're pleased by the results and mobile was stronger than we had expected, really driven by trade in volumes. The late introduction in Q4, some of the smartphones push volume into Q1, more than we had expected. So as we head into Q2, we will have seasonality in connected living both in the normal summer, where we just have a greater loss experience and then trade in volumes usually slowdown in Q2 and Q3 as people are anticipating the next smartphone introductions.

John Nadel -- UBS -- Analyst

How to -- is any chance we can talk about how to think about that in terms of dollar amount of earning, typical seasonality as it is like a 5% quarter-over-quarter decline, and...

Alan B. Colberg -- President and Chief Executive Officer

It's hard for us to predict that, but I would say as we remain very confident in our long-term outlook that we've given for Lifestyle, which is that 10% plus average annual mortgage growth that we have a lot of confidence in quarter-to-quarter, it's harder to predict.

John Nadel -- UBS -- Analyst

Got you. Okay, thank you.

Operator

(Operator Instructions) Our next question comes from Christopher Campbell from KBW. Your line is open.

Alan B. Colberg -- President and Chief Executive Officer

Hey, good morning.

Christopher Campbell -- KBW -- Analyst

Hi, good morning. Congrats on the quarter.

Richard Dziadzio -- Executive Vice President, Chief Financial Officer

Thank you.

Christopher Campbell -- KBW -- Analyst

First question is just on the higher-than-expected losses in housing, I guess how much of the year-over-year increase was due to the higher commercial losses?

Richard Dziadzio -- Executive Vice President, Chief Financial Officer

It was due to -- I'm sorry.

Christopher Campbell -- KBW -- Analyst

The higher attritional, like specialty property losses.

Richard Dziadzio -- Executive Vice President, Chief Financial Officer

Yeah, I mean there was a part in there due to that, I mean that was I would say, the primary part that -- the loss ratio year-over-year as we have sort of pointed out, that's within, just for everyone, that sort of within the specialty property component of housing, which was about $120 million to $500 million and specialty commercial property part is about 20%, 25% and that was a small component, and we didn't have great experience to get increase in severity in that book of business and as we've said, we are monitoring it as we go forward.

Christopher Campbell -- KBW -- Analyst

Got it. And is that more attritional or was it just large losses this quarter?

Alan B. Colberg -- President and Chief Executive Officer

Really an increase in severity, I would say in the book, no huge several big things, but an increase in severity overall.

Christopher Campbell -- KBW -- Analyst

Okay. And then question on repurchases. I mean is $50 million a good quarterly run rate to think about going forward?

Alan B. Colberg -- President and Chief Executive Officer

So, I think the way I think about that question is, we've said that we expect over the next three years to return $1.35 billion to shareholders via common stock, dividends and repurchases, that translates into roughly $300 million a year over the three years in repurchases. We have to remember, we buy via 10b5-1 and so we can't go in and out of the market that easily.

Christopher Campbell -- KBW -- Analyst

Okay, thanks. And then just in mobile, I mean any new clients or relationship extensions that you guys are looking at? I mean, how does the sales pipeline look relative to last year?

Alan B. Colberg -- President and Chief Executive Officer

I think we're very pleased with our progress in mobile. You heard in my prepared remarks, I rave about these four or five major new clients that we've started relationships with in the last 18 to 24 months. And as I mentioned at Investor Day, we will be ramping up later this year with Metro by T-Mobile, which has the potential for about 3 million subs to be added over time to our portfolio. So we're very focused on executing on that, but the pipeline remains strong. Our innovative offerings have really differentiated us and giving us a lot of traction in the market.

Christopher Campbell -- KBW -- Analyst

Okay, great. And then just, I know you guys have talked about like 5G being like a possible tailwind like further out, I guess, just any additional clarity that you have on the development of 5G and then the impact -- the potential impact on your business?

Alan B. Colberg -- President and Chief Executive Officer

Got it. In 5G, what we've talked about is ultimately when that gains real consumer traction, there will be a handset replacement cycle that will occur. I think it's still quite a ways in the future if you look at the timing of the rollout of 5G, but that is a long-term tailwind that will help the business at some point.

Christopher Campbell -- KBW -- Analyst

Okay, great. Well, thanks for all the answers. Best of luck in the second quarter.

Alan B. Colberg -- President and Chief Executive Officer

Thanks, Chris.

Richard Dziadzio -- Executive Vice President, Chief Financial Officer

Thanks, Chris.

Operator

(Operator Instructions) Our last question is coming from John Nadel from UBS. Your line is open.

Alan B. Colberg -- President and Chief Executive Officer

Hey, John.

John Nadel -- UBS -- Analyst

Hey, good morning. It seems everybody's tied up on AIG this morning. Sorry, guys, but I care. So...

Alan B. Colberg -- President and Chief Executive Officer

We appreciate that. Thank you, John.

John Nadel -- UBS -- Analyst

If we -- I am curious your commentary and I appreciate your commentary around the delay of the put call option on Ike into early 2020. I guess -- I'm more curious about how -- you talked about evaluating how that business within given the given the acquisition of TWG and the integration you've got going on. Can you -- like, can you expand on those thoughts a little bit? I know you don't want to get ahead of things here, but I'm just curious what that means?

Alan B. Colberg -- President and Chief Executive Officer

Yeah. So John, let me provide a little context. So when we originally signed the agreement, which was in late 2013, and it's really all about creating more scale for our business in Latin America, which we -- in key markets like Mexico, that's a priority. With The Warranty Group acquisition, we added dramatically more scale in the key markets like Mexico and Argentina and Brazil, and given that, it causes us to step back and say, how do we think about this business. Now, it's important to note over the five years, we've been involved, the business has performed well. It's actually slightly ahead of the expectations we had when we made the original investment. But we have scale now in Latin America. So it's a good chance for us to step back and think about what's best for our shareholders.

John Nadel -- UBS -- Analyst

Got it, understood, OK. And then Alan, one of the -- I guess one of the critics that I hear from time to time and based on the disclosures that we get from you guys, I think it's not so easy to counter this critique, is an overarching belief that your position, and I'm talking about Lifestyle here, your position, Assurant's position in the value chain is one that suffers maybe from lower economic relative to maybe a service provider like a Verizon or another, and that the growth as you grow, your incremental margin may actually be lower. Is that a fair critique or is there some way that you can provide some data that counters that? I think that's one thing that weighs a little bit, your growth rate is -- the top line growth rate looks terrific, right? I mean, in particular these last couple of quarters. I'm just trying to -- I'm trying to see if there's a way to counter that overarching belief or perception.

Alan B. Colberg -- President and Chief Executive Officer

I don't think that's at all the way we think about the business. So we're aligned with the market leaders. We are expanding our whole and providing services to them. We've talked about the addition of major new services in the last 18 months, like premium tech support. And if you look at the long-term, we have grown earnings in that business, 10% plus over the last six years, with an outlook that we're going to continue to be able to do that. So it's a very good business where we are critically important to our partners and delivering the consumer experiences they want.

And so we don't tend to think about the margin of each service, because some of them are fee income, some are not. But we look at it and can we continue to grow profitably, and expand and deepen our relationships with our key clients, which we've done very well.

John Nadel -- UBS -- Analyst

And if we think about Lifestyle discreetly, can you remind us what your return target is for that particular segment?

Alan B. Colberg -- President and Chief Executive Officer

We don't have one, because what we've said matters in Lifestyle. It's not a traditional insurance business. So thinking about returns is not the way to think about it. What we have said is, we can grow earnings and we've done it for six plus years and we can continue to do it. Now, we've said overall for the enterprise, we will be disciplined in that growth with overall enterprise ROE gradually rising over the next three years. But for Lifestyle, specifically it's about profitable earnings growth.

John Nadel -- UBS -- Analyst

Got you. And the last one I have for you, you talked about this some time ago, I don't remember if at Investor Day, there was any real commentary around this, but I'm thinking about Global Auto and the potential that there may be some opportunity to drive down repair costs given your better size and scale and maybe some ability to renegotiate some contracts with repair facilities dealership. I'm just wondering if there's any update on that front. I know it's not something that -- I know you did not build in anything from that and essential stream into your synergies. I'm just wondering if you can give us an update on any progress?

Alan B. Colberg -- President and Chief Executive Officer

John, appreciate question. Let me maybe start just a little more broadly on the TWG synergies, and then I'll come to that one specifically. If you recall, when we did the deal, we announced that we had a hard cost synergy target of $60 million run rate pre-tax by the end of 2019. We are on track and we expect we will deliver that by the end of this year. With that said then, we've really turned a lot of our focus to other sources of synergy ranging from revenue synergies. One of the things we recently rolled out in Japan as the partnership of KDDI around our connected home, we're leveraging our relationship with the legacy Warranty Group capabilities to deliver in the home in Japan.

So that's an example of a revenue synergy that they were going hard after, and on the claims costs absolutely, we now have an extraordinarily strong position in the market, leveraging our knowledge of the cards with the payers, these things that go on. And so we're looking to how do we leverage that now, a lot of that benefit will flow to our clients and many of our programs are reinsured or quota shared with our clients. But that strengthens our relationships with those clients and we'll get some benefits. So we're early days on those, it takes time to implement that. But it's another significant source of synergy that as you said, it's not reflected when we talked about the expectations for the TWG deal.

John Nadel -- UBS -- Analyst

Got it. And since you still have plenty of time, I may as well throw one more in. If I think about the migration on the lender-placed side, the migration to a single operating platform. I know you don't -- you haven't really quantified what spent there if you think can be generated from that over time. I'm wondering if you could give us the sense it doesn't sound like it's that big of a contributor in 2019. I'm wondering, 2020 and beyond, if you think that could be a material impact to the earnings for Global Housing?

Richard Dziadzio -- Executive Vice President, Chief Financial Officer

Yeah, John. Hi, it's Rich. I will take that one. Starting to on-board clients, we are getting some some some good reactions from the clients, I mean, first and foremost, our investment in the program is to position us for a great customer experience going forward and investment we've made is being well received. So I think that's probably the biggest point on that, it's a multi-year project, and I think as we look forward, I don't think there will be a threshold moment where in 2020, we would see a big impact of expenses. But it would be over time and over, I would say over the next years.

On the other hand, I think as you look at the overall expense ratio for the housing area, we are really managing expenses tightly both in the housing area, but overall as a company as you've seen, also in our overall Corporate loss and stability there.

Alan B. Colberg -- President and Chief Executive Officer

John, the important thing on lender-placed, I think probably want to remember is we've now set that we've got that business more stable with significant upside, if we get into an accounting downside . Specifically, on our single source platform for 2019, it's a modest amount. It's really more about as (inaudible) longer term and the consumer experience.

John Nadel -- UBS -- Analyst

And that expense ratio for that segment, should we see that coming down over the next couple of years? And is this maybe part of that driver?

Alan B. Colberg -- President and Chief Executive Officer

I mean, it's hard to predict now where the expense margin is going to go. I think when we look at the overall expense ratio in the first quarter, also taking into account the variety of businesses within it, whether it would be lender-placed, multi-family, whatever, we have brought it down, managing it well. What I expect to go down in the future as we get through the single source platform, I would expect it to go down, but it's hard today to kind of predict what would happen in 2020, exactly.

John Nadel -- UBS -- Analyst

Okay. Maybe it's just the redefinition or redefining the segment loss ratio, expense ratio, combined ratio, but I thought you guys used -- previously, you were talking about 2 to 4 point over time of expense ratio reduction, is that no longer the case or is that just been, like yes, muted or hidden if you will by the aggregation of that expense ratio for the total segment?

Richard Dziadzio -- Executive Vice President, Chief Financial Officer

I think John , what I would say is we still feel very good about the long-term impact of that and we've reaffirmed that 86% to 90% combined ratio over time for the segment.

John Nadel -- UBS -- Analyst

Okay, that's helpful. Thank you so much.

Alan B. Colberg -- President and Chief Executive Officer

Thanks, John. Alright, well, thanks everyone for participating in today's call. We're pleased with our first quarter performance and believe we're off to a strong start for the year. We look forward to updating you on our progress on our second quarter earnings call in August. In the meantime, please reach out to Suzanne Shepherd or Sean Moshier with any follow-up questions. Thank you.

Operator

Thank you. This does conclude today's teleconference. Please disconnect your lines at this time and have a wonderful day.

Duration: 36 minutes

Call participants:

Suzanne Shepherd -- Senior Vice President, Investor Relations

Alan B. Colberg -- President and Chief Executive Officer

Richard Dziadzio -- Executive Vice President, Chief Financial Officer

John Nadel -- UBS -- Analyst

Christopher Campbell -- KBW -- Analyst

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