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. If you would like to ask a question at that time, please press star one on your touch-tone phone. If at any point your question has been answered, you may remove yourself from the queue by pressing the pound key. We ask that you please pick up your handset to allow optimal sound quality. Lastly, if you should require operator assistance, please press star zero. It is now my pleasure to turn the floor over to Suzanne Shepherd, Senior Vice President of Investor Relations. You may begin.
Thank you, Cristina, 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 objectives 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.
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 outperformance 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 repositioned the segment for growth. First, by beginning to stabilize Lender-Placed, and second, by continuing to drive profitable growth within multifamily housing and our other specialty property offerings. In multifamily housing, we grew revenue 7% from both our affinity and property management partners, now protecting 2.1 million renters across the U.S. 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 roll out 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. 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%-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 profit pools. 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 all supports our long-term view that we can continue to grow Global Lifestyle 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 of 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%-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 of 2019, we reported 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?
Thank you, Al, 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 special 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 two 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 Global 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%-90%, including an average expected cat load. 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. 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. 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 enhance 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 trade-in 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 the 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 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-$30 million of incremental expense synergies, mainly in Global Automotive. In addition, mobile should remain a significant contributor to 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. Through 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. 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 U.S., 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 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. Turning to capital. We ended March with $354 million in 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, key outflows included $51 million in share repurchases, $42 million in common and preferred dividends, and $8 million in investments, including strengthening our repair and logistics 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. Our 2019 capital deployment plans take into account our potential purchase of Iké Asistencia. In light of our investment in TWG, we are evaluating how Iké fits into our expanded Latin American operations. We are exploring strategic options for Iké 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 and remain focused on delivering on our commitments for the full year. With that, operator, please open the call for questions.
The floor is now opened for questions. At this time, if you have a question or comment, please press *1 on your touch-tone phone. If at any point your question is answered, you may remove yourself from the queue by pressing the # key. Again, we do ask that while you pose your question, that you pick up your handset to provide optimal sound quality. Thank you. Our first question is coming from John Nadel from UBS.
Hey, good morning, John.
Your line is open, John.
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%. Your actual net earned premium is growing high singles. Is there just a lag effect there that I'm missing or is there some pricing competition going on?
John, morning. This is Richard. I think there's probably a few factors. First of all, we're expanding in the property and casualty channel. We've made some acquisitions. We're entering new avenues now in rental markets. We're also expanding our offerings to include auto renters insurance. I think there's a lag there. The bottom line is we're very happy with our results so far.
Okay, that's helpful. Just one housekeeping note. Your outlook, you do not believe in giving guidance. If we've seen big property reinsurance losses recently of $50 billion, $60 billion, are updating significantly. I just wonder whether you already knew that, had that baked in to your outlook, or is that something that you're looking at and considering including that in the next update? Do you think are you confident in sticking with that overall outlook that you gave? Yeah. No, yeah, thanks for the question. Actually, we did. I mean, we are looking at something in that range right now. We did have losses in that range. We did see some very large losses. We had some pretty significant large losses. That's become a key element in our thinking. Nothing that would affect our outlook. Okay. Yep.
Nearly now talking about $750 million in the second quarter combined ratio versus $81 in the first quarter. Gotcha. That's helpful. Thank you. The last one, I'm just thinking, overall, had it won the case earnings comparably been material? Yes. I would mention that we did have some very favorable signaling, and in particular, Connected Living had a pretty solid, maybe favorable quarter. How should we think about, you've talked about seasonality, you've talked about a little bit higher loss ratios as you move from one quarter to two, can you help us just by divvying maybe in a dollar amount or in relation to how we should think about the earnings path for Connected Living from one, two to six, seven? Yeah. Certainly, this quarter was pretty exceptional. We had over $100 million in claims activity related to that. There's late introductions.
You go to four, some of the larger claims were involved in Q4. We didn't expect those. We did see some unusual activity last quarter. We did see some exceptional activity in our commercial business. The rate environment slowed down considerably. The rate people were anticipating maybe a 15, 16% rate increase. Any chance you can just talk about how to think about that going forward, or just supply your best guess for next year? Yeah. We thought about that. Actually, we did do some modeling on that. For right now, we're just kind of checking that long average. We don't have a firm outlook on that yet. Got it.
Okay. Good morning.
Hi. Yes, hi. Good morning. Congrats on the quarter.
Thank you.
Yeah. 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?
Relates to?
The higher attritional specialty property losses.
Yeah. I think that was different. That was kind of a one-off. There's usually that. I mean, that was, I would say the primary part that took up the loss ratio year-over-year. We did see it bleed out within for everyone that wasn't in Specialty Property or Housing, it was $525 million. That Specialty Property was where our losses were much higher than that. It was all in Housing. It was a different rate period. It was a different period. It was just something that was different than our prior year experience.
Got it. Is that more attritional or was it just large losses this quarter?
It was very, very small. There were some big things, it was mainly just that mix of a lot of little things.
Okay. A question on repurchases. I mean, is $50 million a good quarterly run rate to think about going forward?
I think we mentioned on that Thursday, that we expect to repurchase shares worth $1.35 billion in shares this year of common stock through dividends and repurchases. That translates to roughly 10 million shares-13 million shares over the course of the year. That's roughly 5%-10% of our outstanding shares. Just the annual amount of our outstanding shares.
Okay.
That's the expectation.
Just in mobile or any new clients or relationship extensions that you guys are looking at, I mean, how does the sales pipeline look relative to last year?
Well, I think we're very encouraged. We're finally starting to see that rattle off these four or five major new clients that we've started relationships with in the last two to four months. As I mentioned at Investor Day, we just closed with a major commercial agency which has potential for about 3 million subs. We added to our portfolio. We're very focused on executing on that. The pipeline looks strong. Our rebate offerings have been very well received with a lot of traction.
Okay, great. Then just, you guys have talked about like five deals or when it will further out. I guess just any additional clarity that you have on the development of 5G then the potential impact on your business.
No, in 5G, what we've talked about is more from the standpoint of the spectrum and being able to get the spectrum that we need to support the growth of the business. I think that's really the primary focus.
Okay, great. Well, thanks for all the answers. Best of luck in the second quarter.
All right. Thanks, Chris.
Our line funding comes from John Nadel with UBS, line is open.
Hey, John.
Hey, good morning. This is Scott. Everybody is probably up on the earnings call already, but I care. I appreciate you guys. I'm curious your commentary and appreciate your commentary around the selling of the football option, e-pay, and some of the other businesses. I'm more curious about how you talked about evaluating how that business fits in given the integration you've got going on. Can you expound on those thoughts a little bit in terms of how you want to enhance those? Just curious what that means.
Yeah. Scott, let me provide a little context. When we originally started exploring that relationship with Hertz, it was really all about creating more scale for our business model where we would be able to offer more to customers. As we learned more about the business, we added programmatic importance around the use of that customer data. Given that, it was important for us to step back and say, "How do we think about this business?" It was important to know that while we had a good business, we had a good relationship with that Hertz customer, but we have scale now outside of Hertz where we can offer other solutions.
Alan, I guess one of the critiques that I hear come up 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. An overarching belief that your position, I'm talking about lifestyle here, your position, Assurant position in the market is one that doesn't meet the appeal of lower economic consumers relative to.
Welcome to Assurant second 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. If you would like to ask a question at that time, please press star one on your touch-tone phone. If at any point your question has been answered, you may remove yourself from the queue by pressing the pound key. We ask that you please pick up your handset to allow optimal sound quality. Lastly, if you should require operator assistance, please press star zero. It is now my pleasure to turn the floor over to Suzanne Shepherd, Senior Vice President of Investor Relations. You may begin.
Thank you, Cristina. Good morning, everyone. We look forward to discussing our second quarter 2019 results with you today. Joining me for Assurant 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 second quarter 2019. The release and corresponding financial supplement are available on assurant.com. 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.
Thanks, Suzanne. Good morning, everyone. Our second quarter results surpassed our expectations as mobile benefited from increasing customer demand for our differentiated offerings. Global Lifestyle's strong performance more than offset elevated non-catastrophe loss experience in Global Housing and modestly higher corporate expenses. This quarter, we continued to leverage our market-leading positions and deep consumer insights to deliver value for customers, along with double-digit earnings growth and strong cash flows. In Global Lifestyle, we were pleased to see earnings up 33% organically as Connected Living earnings nearly doubled in the quarter. New programs and client partnerships implemented over the last two years continue to ramp up, driving an 11% increase in covered mobile devices year-over-year. We now support over 48 million mobile customers globally. Overall, mobile's been a strong performer.
Since the fourth quarter of 2017, we've brought on eight new partners, accounting for almost 7 million covered mobile devices, and have expanded several relationships through additional offerings. We have multiple new opportunities on the horizon, which bodes well for our continued growth, but will require increased investments, which Richard will discuss later. Also within Connected Living, we officially launched Metro by T-Mobile's premium handset protection on July 1st. Starting in the third quarter, this will add several million subscribers to our mobile device count, and once fully implemented, will make us the exclusive provider of device protection to all T-Mobile customers. Turning to The Warranty Group, we're very pleased to have delivered on our operating synergies of $60 million pre-tax on a run rate basis for the acquisition.
This milestone comes two quarters ahead of schedule as we have moved swiftly to integrate the business over the last year, optimizing our global operations while strengthening our client relationships. In Global Housing, we saw continued success in multifamily housing as we grew within both our affinity and PMC partners and benefited from higher penetration rates through our new point-of-lease billing and tracking platform. The implementation of our enhanced integrated renters platform progressed with over 20 clients now active. We've also expanded existing relationships with several of the largest property management companies in the U.S. through our differentiated offerings. In the quarter, we further strengthened our leading Lender-Placed franchise by renewing several more partnerships, including three of the top 10 mortgage servicers in the U.S.
With our focus on operational excellence and the customer experience, we made good progress on the rollout of our dynamic claims fulfillment across all Global Housing lines of business. This expedites claims adjudication by reducing time to review and pay claims, as well as simplifying the overall customer experience. The quarter was also characterized by higher non-catastrophe weather losses, a trend seen across the industry. These weather trends and overall elevated claims in our small commercial products lowered housing results. We believe these higher claims in small commercial could continue throughout 2019. We've adjusted our outlook for housing accordingly. Our long-term view of the business remains unchanged. We believe we will generate a 17%-20% operating ROE, including an average expected cat load. Turning to Global Preneed, we produced strong earnings as we generated solid returns and cash flows.
Base sales hit another all-time high of $273 million, benefiting from the expansion of new distribution partners. This gives us confidence that we can sustain an above-market operating ROE of 13% in Global Preneed over the long term. Looking at overall Assurant results for the first half of 2019, we reported net operating earnings per share excluding catastrophes of $4.62, an increase of 9% from the first half of 2018. This was driven by strong earnings growth, partially offset by the impact of shares issued last year related to our TWG acquisition. Net operating income, also excluding catastrophes, was up 25% to $293 million, mainly from TWG contributions, including realized synergies, as well as significant organic mobile growth. At the end of June, holding company liquidity totaled $386 million after returning $88 million to shareholders.
For the full year of 2019, we continue to expect double-digit earnings growth, as well as operating earnings per share to increase 6%-10%. This compares to the $8.65 we reported in 2018. Significant profitable growth in mobile, continued earnings expansion in auto and multifamily housing, as well as disciplined capital deployment will be key drivers. Strong performance in Global Lifestyle, even after including the increased investments to support growth, should help offset the higher non-cat claims in Global Housing. Overall, we believe we will deliver strong results in 2019 with an attractive business portfolio that should continue to produce more diversified, higher quality earnings. This will allow us to continue making investments to accelerate our innovation for the connected consumer, improve the customer experience, 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?
Thank you, Alan, and good morning, everyone. Let's begin with Global Lifestyle. The segment reported record earnings of $109 million for the second quarter, up $41 million year-over-year. The increase reflects an additional $22 million of income from TWG, compared to only one month of earnings recorded in the prior year period. Overall, TWG results for this quarter included $3 million of intangible amortization and $11 million of realized expense synergies, bringing the total realized synergies to $35 million after tax since the acquisition closed. Excluding TWG, Global Lifestyle results were up 33%, which was primarily driven by an impressive $25 million increase in Connected Living year-over-year. Mobile benefited from an increase in subscribers in both Asia Pacific and North America, led by growth in our carrier, OEM, and cable operator distribution channels. In addition, operating performance in Europe was a driver with strong underwriting results.
In Global Automotive, excluding TWG, earnings were down modestly year-over-year due to increased investments to support growth and new offerings. Keep in mind that the second quarter of 2018 included a $2 million one-time benefit. Looking at total revenue for the segment, net earned premiums and fees were up $707 million, mainly from the $481 million of additional revenue from TWG. Excluding TWG, revenue was up $226 million or 25%. This was a reflection of the many mobile programs launched during the past two years. Auto revenue, excluding TWG, was up 17%, benefiting from strong prior period sales in our national dealer and TPA distribution channels. Looking ahead, as Alan noted, we expect additional mobile and auto investments in the third and fourth quarters associated with IT enhancements and program implementations to support our continued growth and new opportunities.
In addition to typical seasonal patterns, mainly increased mobile loss ratios and the impact of new program launches, these additional investments are expected to result in modestly lower earnings for Lifestyle in the second half of 2019 compared to the first half. Overall, for the full year, we still expect significant earnings growth and will have a stronger foundation to maintain our momentum into 2020. Moving to Global Housing. Net operating income for the quarter totaled $72 million, down $1 million from the second quarter of 2018. Both periods benefited from the absence of meaningful reportable catastrophes. Excluding reportable catastrophes, earnings declined $3 million. Growth in multifamily housing was more than offset by less favorable non-catastrophe losses in small commercial products and expected higher reinsurance costs. Second quarter last year also included losses from the Mortgage Solutions business prior to the sale in the third quarter.
Looking specifically at small commercial, we had several large claims and an overall increase in frequency, which we believe could continue. We have made the decision to exit the business and have begun the process of exiting the portfolio. Global Housing revenue declined, reflecting the sale of Mortgage Solutions. Excluding Mortgage Solutions, revenue grew 4% due to the growth in both our specialty portfolio and our multifamily housing business. The placement rate was unchanged for the first quarter of this year, as we onboarded a new portfolio of loans with a higher placement rate. Without this small block, the placement rate would have declined more in line with our expectations or about two or three basis points. In addition, one of our Lender-Placed clients has decided to transfer their portfolio to another provider, reducing our loans track by approximately $2 million in the third quarter.
These loans have a much lower than average placement rate, and policies will transition off that renewal. The net effect of these two portfolio changes is expected to be neutral to our financial results over the next several quarters. As Alan noted, we now expect Global Housing net operating income for 2019 to be down modestly, excluding cat losses, due to the elevated small commercial claims. We continue to expect Lender-Placed to be stable, excluding the higher CAT costs. We are pleased to see the sustained growth in multifamily housing, which should partially offset the decline. Now let's move to Global Preneed. The segment recorded another strong quarter with $17 million of net operating income. The $2 million year-over-year increase was driven by higher net investment income as asset levels increased from continued growth in this business, as well as the move toward a more profitable sales mix.
Revenue in Preneed was up 6%, driven mainly by growth in the U.S., including sales of our final need product. Global Preneed's outlook for the year remains unchanged, with earnings roughly flat with 2018 as we continue to manage expenses closely and look to grow long-term from new and existing clients and adjacent product offerings. At Corporate, the net operating loss was $24 million, a $7 million increase compared to the prior year period. This was attributable to reduced investment income, a result of lower investable assets in comparison to the second quarter of last year. Higher employee-related expenses and third-party professional fees to support growth also drove an increase in the quarterly loss. We continue to expect the Corporate loss to approximate 2018 levels or roughly $85 million.
Turning to capital, we ended March with $386 million in holding company liquidity, or about $161 million above our current minimum target level of $225 million. Dividends in the quarter from our operating segments totaled $177 million. In addition to our quarterly corporate and interest expenses, key outflows included $50 million in share repurchases, $43 million in common and preferred dividends, and $8 million mainly in mobile technology capabilities as part of our venture capital program. In the third quarter, through August 2nd, we repurchased an additional 168,000 shares for $19 million. For full year 2019, we expect dividends from our operating segments to approximate segment operating earnings. We've brought up 66% of segment net operating earnings as dividends to the holding company through the first half of the year. This aligns with our historical pattern.
Overall, the dividend should provide flexibility to invest in our businesses and return capital to shareholders subject to market conditions. In summary, we demonstrated strong first half performance and remain focused on delivering profitable growth and meeting our financial commitments for 2019. With that, operator, please open the call for questions.
The floor is now open for questions. At this time, if you have a question or comment, please press *1 on your touch-tone phone. If at any point your question is answered, you may remove yourself from the queue by pressing the # key. Again, we do ask that while you pose your question, that you pick up your handset to provide optimal sound quality. Thank you. Our first question is coming from Mark Hughes from SunTrust. Please go ahead.
Hey, good morning.
Thank you very much. Good morning.
Morning. A couple of questions. Your Global Housing expense ratio really dropped year-over-year. Could you talk about the drivers in that? I know you've got some expensive initiatives that you've been working on. Is that mix, will that decline continue?
Good morning, Mark. It's Richard. I think a couple things are going on to improve the expense ratio. I think the first thing is last year, obviously, as mentioned in our comments, we had Mortgage Solutions that was weighing down a little bit that ratio. I think secondly, there are some good expense initiatives going on in the housing area that are bringing that down. Third, we have multifamily housing that's continuing to grow as well. A couple of things there that are all helping that expense ratio to be at that level.
When we think about that, the Global Lifestyle growth of 25%, obviously quite strong, and that growth rate doubled compared to last quarter. When we think about kind of the puts and takes, the new business coming online maybe lapping some of that new business from last year, is there any reason why third quarter growth should be demonstrably slower or faster? Just thinking in terms of, as I say, as you've been bringing new customers online, is there the timing? How much does that impact the second half growth outlook?
Mark, no. First of all, I think we're very proud of our team in Global Lifestyle and the strong results they're delivering. Let me separate kind of revenue from NOI. If you think about revenue, we are continuing to ramp the programs that were launched in the last 18 months. We're going to add subscribers. Those programs are going to continue to grow, and that should continue in Q3 and beyond. If you think about the second half of the year, though, when you go to NOI, we do have some seasonality that tends to play out with causing the second half of the year in recent years to be below the first half in mobile, even with the growth. That seasonality really is around a few things. One is, think about when new phones are launched.
The last few years, those launches have been later in the cycle and often availability not really there until early in the next year, which has pushed some of the growth into Q1. The second thing we see is when we launch new clients and new programs, they normally launch in Q3 or early Q4 around the NPI. That's also something we have to invest. Every time we launch those new programs, we have to invest in technology. We have to do the training. We have to do the integration. Just in Q3, we normally have some seasonality in the underwriting results. People are outside more. They drop their phones. They get them wet.
I think we expect to continue to have strong growth over time in Lifestyle. You'll see it probably in revenue in Q3. We expect NOI will be down modestly in the second half from the first half.
Just a longer-term question. Your growth has been so strong in the Connected Living. We think about returns in the Lifestyle segment, I think most of the capital, as I understand it, is there to support the auto business. If you continue to get growth in Connected Living, how much sensitivity is there in terms of returns? Should we see those returns improve as the mix becomes less capital intensive, is there any way to throw any sort of numbers or relative guidance at that idea?
Sure. Thanks, Richard, again. Yes, it's a great question. I think a couple of things in there. I think, first of all, going back to Investor Day, when we look at Lifestyle, we're not really as much looking at returns as we are in growth, really net income growth in the area. As you can see, we just really had a fantastic first half of the year. I think that's sort of the first thing I would say. Just in terms of capital, I think you're exactly right. Auto does take a little more capital than Connected Living, albeit Auto is, I would consider, a bit capital light, too, given the arrangements that we have and the structures that we have. Overall, I think as we look at Assurant as an enterprise, we are going to a less capital-intensive environment as time goes on.
Overall, the returns of Assurant should be increasing. We talked about overall ROE going up a couple hundred basis points over the next few years.
I'll get back in queue. Thank you.
Thanks.
Thanks, Mark.
Our next question comes from John Nadel from UBS. Please go ahead.
Good morning, John.
Hey, good morning, John.
Hey, good morning, Alan. Good morning, Richard. Maybe just to start on Housing. Can you quantify for us, I think you've quantified for us the small commercial business is about maybe 15% of the specialty and other premiums, fees and other income. Is that accurate?
Yeah, that's a good range. Yeah.
Against what looks like maybe, I don't know, $75 million kind of run rate of revenue, how much in operating loss did that particular business generate, whether you want to refer to the second quarter or maybe even the first half of the year?
Yeah. Yeah, we did talk about the small commercial product, and that's a couple of things. It's property and it's liability. As we said in our statements last time, in this time, it did produce some losses for us, and we are exiting the business. I think we've taken some good actions, management actions to rectify that. In terms of the quantification, in Q2, Q1, we're right around $6 million each quarter, I would say, in terms of a loss that it added to the bottom line.
Yeah, John.
Got it. After-tax loss in each quarter was roughly similar and about $12 million on a year-to-date basis.
That's right, John.
Okay, perfect.
Yeah. John, if I could, on housing, let me just make one other comment on housing. If you put aside the small commercial, which was an experiment in growth that we quickly shut down when it didn't perform as expected, we feel very good.
Yeah
about how the balance of housing is performing. Multifamily is continuing to grow. We're still early in the rollout of our point of lease, but that looks very promising for driving penetration. Lender-Placed is performing as expected. We feel generally very encouraged about housing, other than the challenges we had with small commercial and elevated non-GAAP overall.
Yeah, no. That's what I'm trying to get at by sort of stripping away the small commercial business, which obviously I agree with your decision to get out of that business at this point. It does look like housing underneath that or ex that is performing well. If I can move over to Global Lifestyle, then. I just want to understand the pace of earnings or the pattern of earnings. Your revenue growth is much stronger than I think just about anybody's been expecting. Certainly, I can speak for myself. If earnings are going to be down a little bit in the second half relative to the first half, I guess I can understand why margin would be down. Given how fast revenues are growing, should we really expect that earnings are going to decline or just that margin will decline?
I think there's a couple things in there. Again, John, good question. I think as we look at it, and as we've talked about before, I think we have to be very careful in looking at the margin of the Lifestyle business because of the, I would say, the differences or nuances in the accounting. For example, in Q2, there was a contract change with one client that had no impact really on bottom line, but more revenues coming on top line. There's a little bit of noise in the revenue line.
Okay
that can skew a little bit of the margin type issues. As Alan said earlier, we are looking for the earnings to be lower in the second half of the year. The underwriting results we talked about in the investments we're making, the launches that end up going into Q1. All of those things together.
Yeah.
We really focus on the net income and driving net income growth, which obviously we've had a tremendous first half.
Yeah, John, the other thing to think about.
Yeah
We've talked often about the new clients in the pipeline. Our pipeline is actually even stronger than we had anticipated, and it's really a tribute to.
Got you
differentiation we have in the market. We are investing-
Yep
as we go into Q3 to make sure we can capture as many of those as possible because they will create substantial long-term value.
That was going to be my next segue, was just thinking about the longer-term outlook here. If we rewind the clock a couple of months to your Investor Day, it seems like with a couple of quarters under our belt since then, the baseline of both revenues and earnings for Lifestyle is higher than you had expected it would be this year. I just wonder how that maybe impacts the expected growth for the business, in particular, earnings growth as you look out to 2020 and 2021. Should we expect that there's been any real change in that outlook, or is it just a similar growth pattern just off of a higher base of earnings?
A couple of thoughts on that, John. First of all, I think we feel even better positioned today than we did at Investor Day in Lifestyle. The momentum is strong, that's very encouraging.
Yep
the targets at Investor Day are multi-year. What we normally do is, as part of our Q4 earnings call, we'll give you granular detail on what to expect in 2020 with our Q4 earnings call. I would just leave it as momentum is strong and we feel even better positioned than we were back at Investor Day.
Okay. Fair enough. Two more real quick ones. One is, do you expect Small Commercial will be an earnings impact on 2020, or do you think it'll be gone, exited by the end of this year?
As I said, we are exiting the business. Really, we're thinking that it'll be substantially over. Can I say zero for next year? No, probably not, but we're not expecting anything material.
Okay. Last one is just pace of buybacks. I guess I've pushed on this a little bit in the last couple of quarters, but your momentum is so strong. I guess I'm just trying to understand. I know you've been a consistent returner of capital. I just guess I'm wondering why not a little bit faster on the buyback, your opportunity to retire shares in advance of what seems to be really good underlying momentum and earnings growth.
No, John, it's fair. We obviously feel very good about where our business is and how it's performing. We did make a commitment at Investor Day to return $1.35 billion over the next three years. We're making progress against that. As a reminder, though, we do buyback under 10b5-1s. We can't just change them on the fly. You've seen what we're doing. You should expect we will continue to buyback. We'll buyback through CAT season this year, as we've done the last few years. We're on track.
Okay
to meet our expectation over that multi-year period.
Okay. Thanks. I'll get back in the queue. Thanks.
Thanks.
Thanks, John.
Our next question comes from Christopher Campbell from KBW. Please go ahead.
Yeah. Good morning.
Morning.
Morning, Chris.
Hey, great. I guess just starting on the small commercial part of Global Housing. Just looking at, you guys said $12 million in year-to-date losses, so I'd get about 138% combined ratio, something like that. I guess just with rates hardening in commercial property and liability lines, why did you decide to exit versus just taking rate increases on the book?
Yeah, I think, in all the businesses we're in, we bring something special, and we add a lot of value. We add innovation. You can see the growth that we have in Lifestyle, what we're doing in Lender-Placed, multifamily housing, the new systems we're rolling out. Even within special property, we're always launching new things to try to create something special, something different. I think we've come to the conclusion that in this area, we can't do that in the short term. We've made the strategic decision to exit.
Yeah. Chris, I'd add a couple other thoughts to that. One is the book developed. We didn't like the geographic exposure. It was more coastal than we wanted, and we really didn't want to build that part of the book. When we look across our portfolio in deploying our resources and capital, we have substantially better opportunities elsewhere. That led us to very quickly make the decision that we're better off to move on and put that investment elsewhere.
Okay. Got it. That makes sense. Switching to Lifestyle, I was looking at the mobile device growth, which only grew like 10.6%, which is I think the lowest growth rate you've had since 3Q 2017. How should we think about the mobile device growth going forward? What's your current U.S. market share, and where do you think you can get to over time?
Quite a few questions in there, Chris. If I forget some of them, please come back to me. I think if you look at mobile devices, we think of it as a long-term driver of value for our shareholders, and we're going to continue to add them. As we've talked about, as we launch new programs, they generally take anywhere from three to four years to ramp to maturity, and we have a lot of new programs that have just begun. We expect that is going to grow and will grow well, independent of what happens in the market. We're also adding services. If you remember back in Investor Day, we had that chart that show how we've started to try to stack additional services, and many of them are fee income onto that growth.
Again, quarterly growth, I wouldn't put too much focus on that. I think it's more the longer term. We look year-on-year, the momentum that we're driving in the business. In terms of market share, again, we have a leadership position with one important client, and there are several others that we have little position in. We have substantial opportunities for growth in the U.S. market as we look forward.
Okay, great. Just on Global Auto, I noticed growth slowed down there, too. It was like 3%, 3%, 4%. Any color on what's happening in the auto side and Lifestyle?
I think when we look at auto, we're really pleased. As Alan talked about, TWG integration hitting the synergies and the growth that we're getting behind the scenes. We've talked in previous calls about our ability to retain the clients that came over in the TWG acquisition. When we look at it, we're on a good growth pattern, and we look probably less quarter to quarter as over a longer period of time. We are investing here, you'll see the earnings are not as strong as they otherwise could have been, we're investing to continue to grow in the future.
Yeah. Auto has an interesting dynamic in that it's really about share gain. Unlike mobile, where the partnerships tend to be more exclusive, these are businesses where there are many competitors. We are really focused on differentiating our service, our product, our offerings to allow us to gain share over time, leveraging our position.
Got it. Then what are the nature of the investments that you guys are going to accelerate in the second half of the year?
If in Lifestyle, they really fall into a couple of buckets. One, in every product, we are working to add services that create value beyond the underlying insurance or service contract. We have roadmaps that we've been executing against in mobile. We're now executing against in auto. An example would be Pocket Drive in auto. That's one set of the investments. A second area of investment really is around consumer experience. We are in the process of driving a significant digital capability through every one of our products and really evolving that. Finally, we are continuing to add clients and programs, and so there's a significant investment to ramp those programs that'll be going on in the second half of the year.
Okay, great. Just one last one. I'll ask a pre-need question. I think you had mentioned in the script additional pre-need distribution opportunities. What are those?
In Preneed, as you know, we've had a long-term historic partnership with the industry leader. In recent years, we've been looking for additional growth that can really help us strengthen our position. We've been both adding distribution and then also looking for ancillary products similar to what we've done elsewhere. I mentioned on previous earnings calls, we've started to experiment with things like an executor product, really ways to add more value beyond the Preneed product. We're encouraged by the momentum in that business as well.
Okay. Would organic growth or inorganic growth make sense in that segment? Would there be anybody worth acquiring?
Yeah, I think we feel well-positioned with our business today, and I think we're just going to continue to execute against our plan.
Okay, great. Thanks for all the answers.
Thank you.
Thank you.
Our next question comes from Michael Phillips from Morgan Stanley. Please go ahead.
Thank you. Good morning, everybody. Good morning. Just want to start on the housing side again. Your combined ratio there is pretty good, kind of at the low end of that long-term target of 86-90. I guess, since it's there, and it's been there, ex-CAT's been there for a while. How do you think about the impact that has maybe on the housing strategy in terms of, I don't know, maybe growth goals? You've got some cushion there since you're at the low end of the margin. Just how does that affect your strategy of that business for growth?
Maybe I'll start, and Richard, you can add to it. The way we think about Global Housing is we have a really strong growth engine in multifamily and rental, and we've been continuing to gain share there. You can see the policy counts, for example, in our supplement, and we're continuing to invest to differentiate what we do there. We're driving digital throughout that entire business. We're working hard on the point of lease. That's really the growth driver. For the more traditional risk businesses like Lender-Placed, we've really been focused on ensuring we are well-positioned to be participating in any kind of upside that comes, and to have those businesses which generate a lot of cash flow for us continue to generate a lot of cash flow.
We've done things like lower the attach point in the reinsurance tower so that there's less volatility in the earnings coming out of those traditional risk businesses. We've been investing in what we call single source platform, SSP, which is really to differentiate the user experience and allow us to scale the economics over time. I would think about growth really in multifamily and the balance of it, keep it stable, and throw off cash with upside, if we get into any kind of housing slowdown.
I would just say the last thing is we talked about the commercial piece. If something's not working, we take action. It's a great business.
Okay. Thank you. I guess on the TWG, the synergies, you're well ahead of plan there. I guess anything else we could expect going forward to supplement the $60 million? Also on the same kind of note, you've talked about some revenue synergies there and any developments on revenue synergy that you saw since last quarter?
Yeah, I think we feel very good about where we are. We're now a year plus into the integration. Our client relationships are stronger across the board than they were at the time of the merger. We'll continue to push for incremental expense synergies, but that's largely complete at this point. Our focus now is much more on growth and how do we leverage both sides, and that'll continue.
Okay, great. Thanks. I guess maybe one or two more. From the specialty P&C business that you got out of, is there any benefit in 2020 from reinsurance because of that?
Yes. In terms of overall exposure will come down. The absolute reinsurance cost would come down with that.
Okay, great. I guess just one last one. Just an update, you mentioned some new developments and some things you're rolling out on the technology platforms. You mentioned that maybe kind of a rollout since last quarter with PocketDrive. I guess maybe what does that do and any early reads on how that's going?
Mike, it's very early with Pocket Drive, but what we're trying to do there is leverage our capabilities. We developed something called Pocket Geek, which is now well-entrenched in mobile. It's all about the user experience and creating a better ownership experience for the consumer. We leverage those capabilities to create Pocket Drive, which has a similar goal. It's all about the user experience of owning your car. It's very early. We have been in pilots, or we're in pilots now with a few clients. If it goes well, we expect to roll it out broadly. It really differentiates our position in the market and helps us be well-positioned to gain share over time.
Great. Thank you, guys. Appreciate it.
All right. Thank you.
Thank you.
Our next question comes from Gary Ransom from Dowling & Partners. Please go ahead.
Hey, good morning, Gary.
Good morning. You mentioned along the way that there was a client that left in Lender-Placed, and I wondered if you could describe what the reasons might have been, and maybe even thinking back over time. I'm sure there's ins and outs over time. What is it that causes these mortgage servicers to move like that?
Probably not appropriate to speculate on what caused any given client to do something. I think what we'd say there is we've had a strong track record of gaining share in that business to the position we now have. We're aligned with effectively all the major market leaders now in that business. With the movement that we saw in the second quarter, and then what we talked about in the prepared remarks, it has no effect. It's not material to our overall earnings. Again, I think we're well positioned. We are investing heavily to differentiate that business as well. Again, I think we feel good about where we are with Lender-Placed.
Okay. I also wanted to ask a little bit about the commercial, but sort of broader. I assume you looked at it as an experiment, so you were trying something, but in thinking about your broad-based strategy, I guess the way I think about it is you have a servicing value chain that's embedded in a consumer purchase value chain. What was it about this commercial business that fit into that strategy? Maybe I'm missing something.
No, Gary. I think about our businesses having two real sources of differentiation. One you mentioned is we partner, and we're embedded in the value chain. That really is Lifestyle. That's Mobile. That's, agree where multifamily is actually headed. In our housing risk businesses, we do better than market because we find kind of unique capabilities, unique distribution. We were experimenting to see if we could find another one like that, and it just didn't work out. That's why we took the decision quickly. We like risk businesses where we can have some sort of unique advantage, and we had a thesis that just didn't work out on that one.
Are there any of the other 'experiments' that you're working on in that area that are starting to take off or show more promise?
Yeah. In the multifamily world, the rental, we've been doing a lot of experimenting around the sharing economy. Some of those have gone quite well as we grow. Those are a little bit different. They're not really traditional risk businesses the same way. We're encouraged by some of those experiments, and if they work, we'll scale them.
Okay. One more on the capital intensity. One of the things that I was thinking about is how sometimes it's a fee business, sometimes it's insurance. When it's insurance, it's running through an insurance entity that has regulatory capital requirements and the like. Trying to make it capital light could be doing more contracts that are not insurance oriented or not structured as insurance. I wonder, is that something you control or can control, or is that almost all on the client side and their decision process?
I think there's a couple things in that. I think first, if I step back and look at the overall enterprise, I would say that lifestyle is less capital intensive than housing, obviously. You're exactly right. One of the things that I think is a great value that Assurant brings to clients is we're able to bring this insurance business and also all the other value adds that we have that are not necessarily insurance based. The premium tech support type things that we do, the administrative support, the marketing, the training. Everything that we do that we get paid a fee for, that's not based. Do we control it? I think what we do is we go up to our clients, and one of our values is we say to clients, "What would you like?" We can customize an offering for them.
With the growth of Lifestyle and the growth of mobile and all the added services we're adding, I think just by nature of that, it's becoming less capital intensive. As we win new clients, they are probably less capital intensive given all the added services that we're bringing to them.
Is it fair to say, based on what you just said, that the trend toward the client desires is toward a slightly lower capital-intensive approach?
I think in a lot of the businesses we're doing, and if we look at, for example, the auto business, there's insurance behind it. In many instances, the transactions we're doing with our clients, they're sharing the risk, if not all, a good part of it. That is capital light. No, I think the trend is more toward capital light. At the same time as we see that fee business growing more than the capital business, it's just a weighted average calculation at the end of the day that the overall business becomes less capital-intensive as we go forward. Also, the things, the moves that we've made on the housing business, where we've brought down the retention also helps us as well.
Right. All right. That's helpful. Thank you very much.
Okay. Thank you.
All right. Thanks, Gary.
Once again, if you do have a question, you may press star one on your touch-tone phone at this time. Our next question comes from Mark Hughes from SunTrust. Please go ahead.
Hey, good morning, Mark.
If you might touch on investment income. It's been a little bit up and down the last few quarters. Definitely down sequentially in the second quarter. Is this a reasonable run rate or is it just going to continue to be volatile?
Excuse me. Well, in the first quarter, we really had a mark-to-market of a real estate portfolio that we have, and so that gave us some nice earnings as we reported out. From time to time, we will get those real estate gains that we report out. We have them in the supplement and so forth. The choppiness that comes is typically good news, I would say, over a kind of a run rate. We manage the portfolio more on an income basis, so we don't see big volatility within the underlying portfolio from period to period. Most of the portfolio is in high-grade fixed income. The volatility, if anything, it's a good thing for us. I would look at it, Mark, more over a longer period of time, and you'll get a nice run rate there.
Just so I'm clear, with that mark-to-market on the real estate portfolio, was that four Q rather than one Q?
No, it was 1 Q.
One Q.
Yeah, we had some JV gains in 4Q as well. Yeah, there were gains there and there were gains in 1Q as well.
Okay. Thank you.
Thank you, Mark.
Our last question is coming from John Nadel from UBS. Please go ahead.
Hey, good morning again, John.
Good morning again. Thanks for taking the follow-up. It's just a couple real quick ones. One, is there any update you can provide publicly as it relates to how things are moving along around Iké Asistencia?
I think the update is, we're still on the path that we had set out last quarter. We're looking at our strategic options. We're, I would say, looking out in the market at those options. It's still early days, obviously, as we kind of gear up to look out and so forth. No other update other than that, and we'll be back every quarter if something material happens.
Okay. Do you feel like there's actually any progress or is it just quiet?
Oh, no. We've set a path for ourselves.
Okay
into the market, look at our strategic options. Can't say where that's going to go. It's early days. No, we're progressing well.
Okay. I guess last one is just this. Alan, I think in your prepared remarks, you talked a little bit about T-Mobile. I don't recall exactly what you said. I might have joined just a little bit too late. Maybe you could just sort of reiterate what's happening there. Relatedly, whether they gain approval or they don't gain approval to merge with Sprint, what do you think it would take for Assurant to win Sprint's business or somebody's business like that? Is that part of the investment spending that you are characterizing as sort of already part of your plans, or would that be something that you would expect would be incremental if you felt like that opportunity was right in front of you?
Yeah. John, let me start with T-Mobile since that was what I mentioned in the prepared remarks. What I was referring to there is that we are in the process now of implementing the move of Metro by T-Mobile over to Assurant. As we complete that, we're proud now to be the device protection partner for all of T-Mobile's businesses. That's a great position to be in.
Got you.
It's really a result of the years of working side by side with them, really helping differentiate their business as they revolutionize the industry. We feel well-positioned with T-Mobile no matter what happens in the market and with mergers. In terms of what's happening in the market, we couldn't speculate on what might or might not happen. At Investor Day, when we gave our long-term outlook, we didn't contemplate any major new client coming our way. If we did get one, that would be incremental to what we have been talking about.
Okay. Incremental on both sides of the income statement, if you will. The incremental from a revenue perspective, also incremental from a, you have these upfront costs related to new client acquisition, if you will.
Yeah. We built our plan with the line of sight we had with the clients that we have partnerships with. We didn't contemplate in the long-term outlook new clients.
Got you. If I can sneak one more in, can you just give us an update on how things are going with respect to Apple as well as the modest but new arrangement you've got with Verizon?
Yeah. Without going into a lot of specifics on how individual clients are performing, I think we feel good with our evolving partnership with Apple. We're now working with them in multiple geographies. We're expanding our reach in their value chain over time. I think we feel good with that. With Verizon and the other major prospects, both in the U.S. and outside of the world, we're working hard to differentiate and show that we can bring innovation. We'll see where those go over time. We do believe we're a disruptive player and that we can help really these clients win over time.
Thanks so much. Really good quarter. Keep up the momentum.
All right. We appreciate it. Thank you, everyone. Thanks for participating in today's call. We're pleased with our first half performance and believe we're well-positioned to deliver on our financial objectives for the year. We look forward to updating you on our progress in our third quarter earnings call in November. In the meantime, please reach out to either Suzanne Shepherd or Sean Moshier with any follow-up questions. Thanks, everyone.
Thank you. This does conclude today's teleconference. Please disconnect your lines at this time, and have a wonderful day.