- Net income of $6.6 million, or $0.16 per share, for the first
quarter
- Diversified business delivered core earnings* of $9.7 million,
or $0.23 per share, for the first quarter, despite elevated
catastrophe losses
- Educator household acquisition momentum continued again in
first quarter with strong sales across Retail and Worksite
Divisions
- Strong Supplemental & Group Benefit segment core earnings
of $14 million offset impact of lower-than-anticipated contribution
of net investment income to Property & Casualty segment core
earnings
- Catastrophe losses reduced first-quarter Property &
Casualty segment earnings by $22 million (pretax) compared to $7
million (pretax) in last year’s first quarter
- Rate actions to address inflationary pressure in auto and
property businesses on track to full-year plan
- Continue to expect full-year 2023 EPS in range of $2.00-$2.30
as trajectory toward sustainable double-digit ROEs resumes
- Expected contribution to full-year 2023 core earnings from
Supplemental & Group Benefits segment increased on strong first
quarter; offsets impact of lower-than-anticipated first-quarter net
investment income in Property & Casualty segment
- Anticipating 2024 ROE at 10% with core EPS approaching $4;
average annual EPS growth targeted at 10% in 2025 and beyond
Horace Mann Educators Corporation (NYSE:HMN) today reported
financial results for the three months ended March 31, 2023:
($ in millions, except per share
amounts)
Three Months Ended
March 31,
2023
2022
% Change
Total revenues
$
353.9
$
346.7
2.1
%
Net income
6.6
20.3
-67.5
%
Net investment losses, after tax
(3.1
)
(12.2
)
N.M.
Core earnings*
9.7
32.5
-70.2
%
Adjusted core earnings*
12.6
35.8
-64.8
%
Per diluted share:
Net income
0.16
0.48
-66.7
%
Net investment losses, after tax
(0.07
)
(0.29
)
N.M.
Core earnings per diluted share*
0.23
0.77
-70.1
%
Adjusted core earnings per diluted
share*
0.30
0.85
-64.7
%
Book value per share
27.87
32.66
-14.7
%
Adjusted book value per share*
36.16
37.31
-3.1
%
Tangible book value per share*
30.43
31.12
-2.2
%
N.M. - Not meaningful.
* These measures are not based on
accounting principles generally accepted in the United States of
America (non-GAAP). They are reconciled to the most directly
comparable GAAP measures in the Appendix to the Investor
Supplement. An explanation of these measures is contained in the
Glossary of Selected Terms included as an exhibit in the Company’s
reports filed with the Securities and Exchange Commission.
“First-quarter results confirmed that we are on pace to meet our
business objectives for this year despite the outsized catastrophe
losses,” said President and CEO Marita Zuraitis. “The efficiency
and care our claims team displayed while helping our educator
customers recover from those events is a testament to the respect
and admiration we have for our country’s educators. The growth we
continue to see across our increasingly diversified business
further underscores our optimism for Horace Mann’s long-term
success as the leading provider of education market solutions for
both school districts and individual educators.
“In particular, our sales momentum accelerated in the first
quarter as our ability to reach educators continues to improve,”
Zuraitis continued. “In our Worksite Division, first-quarter sales
were up 164%, or $2.3 million, with worksite direct sales
continuing to improve toward pre-pandemic levels. In our Retail
Division, educators continued to respond favorably to the solutions
offered by our Life & Retirement business. Annualized Life
sales were up 22% and Retirement results remained solid, despite
continued external headwinds.
“We remain on track to our longer-term profitability targets in
our Property & Casualty business,” Zuraitis noted. “Property
& Casualty net written premiums were up 7% for the first
quarter, as our rate and non-rate underwriting actions begin to
take effect and retention remained steady with year end. Auto sales
rose for another quarter, largely in states where we are confident
in the pricing outlook.
“Over the past five quarters, we’ve implemented auto rate
increases of almost 10% nationwide, and continue to expect rate
actions over the remainder of 2023 will generate a cumulative
impact of 18% to 20% by year-end 2023,” Zuraitis said. “We believe
this plan should contribute to an auto combined ratio between 97%
and 98% in 2024. Further, we expect property rate increases will
total 12% to 15% over the course of 2023. Combined with the impact
of ‘inflation guard’ increases to keep home coverage values
current, we expect average renewal premiums for property to
increase by 17% to 20% in 2023. This puts us on track to our
targeted property combined ratio between 92% and 93% for 2024.
“We remain confident that our growth over the next several years
will increase our share of the education market,” Zuraitis said.
“As we move toward our longer-term profitability targets in the
Property & Casualty segment, we continue to expect our 2023
core EPS will be in the range of $2.00 to $2.30. Our full-year view
now reflects a higher contribution from the Supplemental &
Group Benefit segment due to strong first-quarter results, offset
by the impact of lower-than-expected net investment income for the
Property & Casualty segment in the first quarter. In 2024, we
believe we will return to a double-digit return on equity as core
EPS approaches $4, driven by our profitable growth.”
Segment outlook for 2023
2023 core EPS guidance of $2.00 to $2.30 (or core earnings of
$84 million to $96 million, after tax) remains unchanged:
- Property & Casualty segment core earnings guidance updated
to between breakeven and $5 million in 2023, due to the
lower-than-expected limited partnership portfolio returns in the
first quarter. We continue to assume a full-year catastrophe loss
contribution of about 10 points to the combined ratio. The
longer-term combined ratio target for the segment remains
95-96%.
- Life & Retirement segment core earnings guidance unchanged
at $67 million to $70 million in 2023. In 2023, the spread on the
fixed annuity business is expected to be in the range of 220 to 230
basis points, above the target threshold for this business.
- Supplemental & Group Benefits segment core earnings
guidance updated to $45 million to $49 million in 2023, due to the
strong first-quarter results. The longer-term target for the
segment benefit ratio remains 43%. The pretax profit margin will
reflect the investment being made in this segment’s infrastructure
as well as a higher allocation of corporate expenses to reflect the
segment’s utilization of shared staff, distribution and other
resources.
Full-year net investment income from the managed portfolio now
expected to be between $325 million and $335 million.
Reporting Segment Results
Horace Mann reports financial results in three reporting
segments: (1) Property & Casualty, (2) Life & Retirement,
and (3) Supplemental & Group Benefits. The retail business,
consisting of the Property & Casualty and Life & Retirement
segments, provides insurance and financial services to individual
educators through agency and direct channels. The Supplemental
& Group Benefits segment provides worksite direct and
employer-sponsored benefits through school district employers.
These worksite offerings help school districts attract and retain
staff.
Horace Mann adopted the Financial Accounting Standards Board’s
Accounting Standard Update 2018-12 Financial Services - Insurance:
Targeted Improvements to the Accounting for Long-Duration Contracts
as of January 1, 2023, with a January 1, 2021 transition date. The
company’s 2022 results have been recast to reflect the ASU and are
reflected in this release on that basis.
Property & Casualty segment results reflected outsized
catastrophe losses
(All comparisons vs. same period in 2022, unless noted
otherwise)
The Property & Casualty segment primarily markets private
passenger auto insurance and residential home insurance. Horace
Mann offers standard auto coverages, including liability, collision
and comprehensive. Property coverage includes both homeowners and
renters policies. For both auto and property coverage, Horace Mann
offers educators a discounted rate and the Educator Advantage®
package of features. The Property & Casualty segment
represented 47% of total revenues for the year ended 2022.
($ in millions)
Three Months Ended
March 31,
2023
2022
Change
Property & Casualty net premiums
written*
$
149.1
$
139.6
6.8
%
Property & Casualty net income (loss)
/ core earnings (loss)*
(11.6
)
8.5
N.M.
Property & Casualty combined ratio
112.7
%
98.4
%
14.3 pts
Property & Casualty underlying loss
ratio*
69.8
%
67.3
%
2.5 pts
Property & Casualty expense ratio
28.2
%
26.3
%
1.9 pts
Property & Casualty catastrophe
losses
14.7
%
4.8
%
9.9 pts
Property & Casualty underlying
combined ratio*
98.0
%
93.6
%
4.4 pts
Auto combined ratio
110.9
%
101.8
%
9.1 pts
Auto underlying loss ratio*
80.7
%
75.5
%
5.2 pts
Property combined ratio
115.8
%
92.3
%
23.5 pts
Property underlying loss ratio*
50.2
%
52.3
%
-2.1 pts
The Property & Casualty segment core loss for the first
quarter was in line with the company’s preliminary announcement.
Property & Casualty net premiums written were up 6.8% with
average written premiums rising for both property and auto. In
addition, segment net investment income for the quarter was below
the prior year, largely due to lower-than-anticipated returns on
the segment’s limited partnership portfolio.
The combined ratio was above the prior year, largely due to
higher catastrophe losses in this year’s first quarter. Catastrophe
losses for the quarter were $22.4 million, pretax, contributing
14.7 points to the combined ratio. In total, there were 23 events
designated as catastrophes by Property Claims Services (PCS) in the
year’s first quarter, including two severe storms in the Midwest in
late March. In the first quarter of 2022, catastrophe losses were
$7.3 million, pretax, contributing 4.8 points to the combined
ratio, from 11 PCS events.
The year-over-year increase in average written premiums for auto
policies also improved in the first quarter, reaching 8.1% compared
to 4.8% in the fourth quarter. The increase reflects auto rate
increases of almost 10% nationwide since the beginning of 2022. The
first-quarter auto underlying loss ratio was 80.7%, largely
reflecting the loss cost factors being addressed through rate and
non-rate underwriting actions.
The year-over-year increase in average written premiums for
property policies was 9.8% in the first quarter, as rate increases
taken over the past five quarters and inflation adjustments to
coverage values take effect. The first quarter property underlying
loss ratio was 50.2%, improved from 2022 due to lower fire
losses.
Life & Retirement segment net income of $14
million
(All comparisons vs. same period in 2022, unless noted
otherwise)
The Life & Retirement segment markets 403(b) tax-qualified
fixed, fixed indexed and variable annuities; the Horace Mann
Retirement Advantage® open architecture platform for 403(b)(7) and
other defined contribution plans; and other retirement products to
educators as well as traditional term and whole life insurance
products. Horace Mann is one of the largest participants in the
K-12 educator portion of the 403(b) tax-qualified annuity market,
measured by 403(b) net premiums written on a statutory accounting
basis. The Life & Retirement segment represented 36% of total
revenues for the year ended 2022.
($ in millions)
Three Months Ended
March 31,
2023
2022
Change
Life & Retirement net income / core
earnings*
$
14.0
$
15.6
-10.3
%
Life & Retirement adjusted core
earnings*
14.0
15.8
-11.4
%
Life annualized sales*
2.2
1.8
22.2
%
Life mortality costs
19.5
21.4
-8.9
%
Net annuity contract deposits*
109.2
112.0
-2.5
%
Annuity assets under management(1)
4,944.3
5,134.5
-3.7
%
Total assets under administration(2)
8,398.8
9,027.7
-7.0
%
(1) Amount reported as of March 31, 2023
excludes $664.7 million of assets under management held under
modified coinsurance reinsurance.
(2) Includes Annuity AUM, Brokerage and
Advisory AUA, and Recordkeeping AUA.
Life & Retirement segment core earnings were $14.0 million
for the quarter. For the segment, net investment income rose 4.4%
reflecting a higher contribution from floating rate investments,
including commercial mortgage loan funds. Interest credited, which
includes interest on FHLB funding agreements, rose more rapidly
than investment income due to the timing of rate resets. As a
result, the annualized net interest spread on our fixed annuity
business was 206 basis points for the first quarter compared to 286
basis points a year ago.
For the segment, total benefit expenses declined as improved
Life mortality experience more than offset unfavorable market risk
benefit adjustments for Retirement.
For the Retirement business, net annuity contract deposits were
$109.2 million for the first-quarter. Educators continue to begin
their relationship with Horace Mann through 403(b) retirement
savings products, including the company’s attractive annuity
products, which provide encouraging cross-sell opportunities. Total
cash value persistency remained strong at 93.1%. Life annualized
sales were $2.2 million for the quarter.
Horace Mann currently has $4.9 billion in annuity assets under
management, including $2.1 billion of fixed annuities, $2.3 billion
of variable annuities and $0.5 billion of fixed indexed annuities.
Assets under administration, which includes Horace Mann Retirement
Advantage® and other advisory and recordkeeping assets, were down
from a year ago as equity market performance affected assets under
management. Life insurance in force rose to $20.2 billion at March
31, 2023.
Supplemental & Group Benefits segment net income of $14
million
(All comparisons vs. same period in 2022, unless noted
otherwise)
The Supplemental & Group Benefits segment markets
employer-sponsored group worksite solutions for districts and other
public employers, as well as worksite direct products typically
distributed through the worksite channel. The worksite business
provides group term life, disability and specialty health insurance
along with worksite supplemental products including cancer, heart,
hospital, supplemental disability and accident coverages. The
Supplemental & Group Benefits segment represented 21% of total
revenues for the year ended 2022.
($ in millions)
Three Months Ended
March 31,
2023
2022
Change
Supplemental & Group Benefits net
income / core earnings*
$
14.0
$
13.2
6.1
%
Supplemental & Group Benefits adjusted
core earnings*
16.9
16.2
4.3
%
Pretax profit margin(1)
24.9
%
21.4
%
3.5 pts
Net premiums earned
$
65.8
$
69.8
-5.7
%
Worksite direct products sales*
3.7
1.4
164.3
%
Employer-sponsored products sales*
4.5
2.3
95.7
%
Worksite direct products benefit ratio
22.1
%
22.2
%
-0.1 pts
Employer-sponsored products benefit
ratio
42.6
%
65.9
%
-23.3 pts
(1) Measured to total revenues.
Supplemental & Group Benefits segment core earnings rose
6.1% while adjusted core earnings were up 4.3% for the quarter,
reflecting a strong pretax profit margin due to continued favorable
benefit ratios. The benefit ratio for the worksite direct product
line for the quarter was in line with last year’s first quarter and
remains below longer-term targets as utilization remains below
historical levels. The benefit ratio for the employer-sponsored
product lines for the quarter improved from last year due to
frequency well below anticipated levels.
The non-cash impact of amortization of intangible assets under
purchase accounting reduced first quarter 2023 core earnings by
$3.6 million pretax vs. $3.9 million in 2022. Segment net
investment income rose 28.2% for the quarter, largely due to the
repositioning of the Madison National Life portfolio to target
asset allocations aligned with the company’s investment
guidelines.
Total sales for the segment were $8.2 million. Sales of worksite
direct supplemental products were up 164.3% to $3.7 million, with
persistency remaining very strong at 90.6%. Sales of
employer-sponsored products were up 95.7% to $4.5 million.
Consolidated Results
Horace Mann’s investment strategy is primarily focused on
generating income to support product liabilities, and balances
principal protection and risk. Total net investment income includes
net investment income on the investment portfolio managed by Horace
Mann, as well as accreted investment income on the deposit asset on
reinsurance related to the company’s reinsurance of policy
liabilities related to legacy individual annuities written in 2002
or earlier. The Corporate & Other segment reduced total
revenues by $56.1 million for the year ended 2022 largely due to
net investment losses.
Net investment income of $100 million
(All comparisons vs. same period in 2022, unless noted
otherwise)
($ in millions)
Three Months Ended
March 31,
2023
2022
Change
Pretax net investment income - investment
portfolio
$
74.7
$
73.0
2.3
%
Pretax investment income - deposit asset
on reinsurance
25.7
24.9
3.2
%
Total pretax net investment income
100.4
97.9
2.6
%
Pretax net investment losses
(3.9
)
(15.5
)
N.M.
Pretax net unrealized investment gains
(losses) on fixed maturity securities
(453.3
)
16.7
N.M.
Investment yield, excluding limited
partnership interests, pretax - annualized
4.72
%
4.36
%
0.36 pts
N.M. - Not meaningful.
Total net investment income and net investment income on the
managed portfolio were above last year’s first quarter, reflecting
a higher contribution from floating rate investments, including
commercial mortgage loan funds. Investment yield on the portfolio
excluding limited partnership interests rose to 4.72% with new
money yields continuing to exceed portfolio yields in the core
fixed maturity securities portfolio. Limited partnerships portfolio
returns were negative for the quarter, driven primarily by lower
private equity valuation adjustments, which are generally reported
on a three-month lag and partially reflect weak equity market
returns in 2022.
The fixed maturity securities portfolio was in a net unrealized
investment loss position of $453.3 million pretax at March 31,
2023, primarily due to the elevated interest rate environment. Net
investment losses were well below last year.
Adjusted book value per share* of $36.16 at quarter
end
At March 31, 2023, shareholders’ equity was $1.14 billion, or
$27.87 per share, as continued higher interest rates resulted in
net unrealized investment losses on fixed maturity securities.
Excluding the unrealized losses and effect of net reserve
remeasurements attributable to discount rates*, shareholders’
equity was $1.48 billion, or $36.16 per share*. During the first
quarter, Horace Mann repurchased 128,540 shares at an average price
of $34.01. As of March 31, 2023, $36.9 million remained authorized
for future repurchases under the share repurchase program. In April
2023, the company repurchased 29,094 shares for a total of
$949,000.
At March 31, 2023, total debt was $498.0 million, with $249.0
million outstanding on the company’s revolving credit facility.
Interest expense was $6.7 million for the first quarter of 2023
compared to $3.9 million for the first quarter of 2022 due to
higher interest expense on the line of credit. The ratio of
debt-to-capital excluding net unrealized investment gains/losses
and effect of net reserve remeasurements attributable to discount
rates* was 25.2% at March 31, 2023, which aligns with levels
appropriate for the company’s current financial strength
ratings.
Quarterly webcast
Horace Mann’s senior management will discuss the company’s
first-quarter financial results with investors on May 3, 2023 at
noon Eastern Time. The conference call will be webcast live at
investors.horacemann.com and archived later in the day for
replay.
About Horace Mann
Horace Mann Educators Corporation (NYSE: HMN) is the largest
financial services company focused on helping America’s educators
and others who serve the community achieve lifelong financial
success. The company offers individual and group insurance and
financial solutions tailored to the needs of the educational
community. Founded by Educators for Educators® in 1945, Horace Mann
is headquartered in Springfield, Illinois. For more information,
visit horacemann.com.
Safe Harbor Statement and Non-GAAP Measures
Certain statements included in this news release, including
those regarding our earnings outlook, expected catastrophe losses,
our investment strategies, our plans to implement additional rate
actions, our plans relating to share repurchases and dividends, our
efforts to enhance customer experience and expand our products and
solutions to more educators, our strategies to create sustainable
long-term growth and double-digit ROEs, our strategy to achieve a
larger share of the education market, and other business
strategies, constitute forward-looking statements within the
meaning of the U.S. Private Securities Litigation Reform Act of
1995. Forward-looking statements are made based on management’s
current expectations and beliefs concerning future developments and
their potential effects upon Horace Mann and its subsidiaries.
Horace Mann cautions investors that such statements are subject to
risks and uncertainties, many of which are difficult to predict and
generally beyond Horace Mann’s control, that could cause actual
results to differ materially from those expressed in, or implied or
projected by, the forward-looking statements included in this
document. Certain important factors that could cause actual results
to differ, possibly materially, from expectations or estimates
reflected in such forward-looking statements can be found in the
“Risk Factors” and “Forward-Looking Information” sections included
in Horace Mann’s Annual Reports on Form 10-K and Quarterly Reports
on Form 10-Q filed with the Securities and Exchange Commission
(SEC). The forward-looking statements herein are subject to the
risk, among others, that we will be unable to execute our strategy
because of market or competitive conditions or other factors.
Horace Mann does not undertake to update any particular
forward-looking statement included in this document if we later
become aware that such statement is not likely to be achieved.
Information contained in this news release include measures
which are based on methodologies other than accounting principles
generally accepted in the United States of America (GAAP).
Reconciliations of non-GAAP measures to the closest GAAP measures
are contained in the Appendix to the Investor Supplement and
additional descriptions of the non-GAAP measures are contained in
the Glossary of Selected Terms included as an exhibit to Horace
Mann’s SEC filings.
HORACE MANN EDUCATORS
CORPORATION
Financial Highlights
(Unaudited)
($ in millions, except per share
data)
Three Months Ended
March 31,
2023
2022
% Change
Earnings Summary
Net income
$
6.6
$
20.3
-67.5
%
Net investment losses, after tax
(3.1
)
(12.2
)
N.M.
Core earnings*
9.7
32.5
-70.2
%
Adjusted core earnings*
12.6
35.8
-64.8
%
Per diluted share:(1)
Net income
$
0.16
$
0.48
-66.7
%
Net investment losses, after tax
(0.07
)
(0.29
)
N.M.
Core earnings*
0.23
0.77
-70.1
%
Adjusted core earnings (loss)*
0.30
0.85
-64.7
%
Weighted average number of shares and
equivalent shares (in millions) - Diluted
41.4
42.1
-1.7
%
Return on Equity
Net income return on equity - LTM(2)
0.5
%
9.8
%
Net income return on equity -
annualized
2.4
%
5.7
%
Core return on equity - LTM*(3)
3.0
%
10.3
%
Core return on equity - annualized*
2.6
%
8.4
%
Adjusted core return on equity -
LTM*(4)
3.9
%
11.0
%
Adjusted core return on equity -
annualized*
3.4
%
9.3
%
Financial Position
Per share:(5)
Book value
$
27.87
$
32.66
-14.7
%
Effect of net unrealized investment gains
(losses) on fixed maturity securities
$
(8.72
)
$
0.31
N.M.
Per share impact of net reserve
remeasurements attributable to discount rates*
$
0.43
$
(4.96
)
N.M.
Adjusted book value
$
36.16
$
37.31
-3.1
%
Dividends paid
$
0.33
$
0.32
3.1
%
Ending number of shares outstanding (in
millions)(5)
40.9
41.4
-1.2
%
Total assets
$
13,658.1
$
14,408.0
-5.2
%
Short-term debt
249.0
249.0
—
%
Long-term debt
249.0
253.7
-1.9
%
Total shareholders’ equity
1,139.2
1,351.5
-15.7
%
N.M. - Not meaningful.
(1) Calculated using basic shares when in
a net loss or core loss position.
(2) Based on last twelve months net income
and average quarter-end shareholders’ equity.
(3) Based on last twelve months core
earnings and average quarter-end shareholders’ equity which has
been adjusted to exclude the fair value adjustment for investments,
net of the related impact on deferred policy acquisition costs and
applicable deferred taxes.
(4) Based on last twelve months adjusted
core earnings and average quarter-end shareholders’ equity which
has been adjusted to exclude the fair value adjustment for
investments, net of the related impact on deferred policy
acquisition costs and applicable deferred taxes.
(5) Ending shares outstanding were
40,867,496 at March 31, 2023 and 41,381,082 at March 31, 2022.
HORACE MANN EDUCATORS
CORPORATION
Consolidated Statements of
Operations and Data (Unaudited)
($ in millions, except per share
data)
Three Months Ended
March 31,
2023
2022
% Change
Consolidated Statements of
Operations
Net premiums and contract charges
earned
$
255.9
$
255.8
—
%
Net investment income
100.4
97.9
2.6
%
Net investment losses
(3.9
)
(15.5
)
N.M.
Other income
1.5
8.5
-82.4
%
Total revenues
353.9
346.7
2.1
%
Benefits, claims and settlement
expenses
183.2
175.2
4.6
%
Interest credited
48.7
39.7
22.7
%
Operating expenses
79.8
76.7
4.0
%
DAC amortization expense
23.7
22.0
7.7
%
Intangible asset amortization expense
3.7
4.2
-11.9
%
Interest expense
6.7
3.9
71.8
%
Total benefits, losses and expenses
345.8
321.7
7.5
%
Income before income taxes
8.1
25.0
-67.6
%
Income tax expense
1.5
4.7
-68.1
%
Net income
$
6.6
$
20.3
-67.5
%
Net Premiums Written and Contract
Deposits*
Property & Casualty
$
149.1
$
139.6
6.8
%
Life & Retirement
136.1
136.4
-0.2
%
Supplemental & Group Benefits
67.2
70.2
-4.3
%
Total
$
352.4
$
346.2
1.8
%
Segment Net Income (Loss)
Property & Casualty
$
(11.6
)
$
8.5
N.M.
Life & Retirement
14.0
15.6
-10.3
%
Supplemental & Group Benefits
14.0
13.2
6.1
%
Corporate & Other(1)
(9.8
)
(17.0
)
42.4
%
Consolidated net income
$
6.6
$
20.3
-67.5
%
Net investment losses
Before tax
$
(3.9
)
$
(15.5
)
N.M.
After tax
(3.1
)
(12.2
)
N.M.
Per share, diluted
$
(0.07
)
$
(0.29
)
N.M.
N.M. - Not meaningful.
(1) Corporate & Other includes
interest expense on debt and the impact of net investment gains and
losses and other Corporate level items. The Company does not
allocate the impact of corporate level transactions to the
insurance segments consistent with how management evaluates the
results of those segments. See detail for this segment on page
12.
HORACE MANN EDUCATORS
CORPORATION
Business Segment Overview
(Unaudited)
($ in millions)
Three Months Ended
March 31,
2023
2022
Change
Property & Casualty
Net premiums written*
$
149.1
$
139.6
6.8
%
Net premiums earned
152.4
150.2
1.5
%
Net investment income
4.0
7.2
-44.4
%
Other income
0.7
0.8
-12.5
%
Losses and loss adjustment expenses
(LAE)
128.8
108.3
18.9
%
Operating expenses (includes amortization
expense)
42.9
39.4
8.9
%
Income (loss) before income taxes
(14.6
)
10.5
N.M.
Net income (loss) / core earnings
(loss)*
(11.6
)
8.5
N.M.
Net investment income, after tax
3.5
6.1
-42.6
%
Catastrophe losses
After tax
17.7
5.7
210.5
%
Before tax
22.4
7.3
206.8
%
Prior years’ reserve development, before
tax(1)
Auto
—
—
N.M.
Property and other
—
—
N.M.
Total
—
—
N.M.
Operating statistics:
Loss and loss adjustment expense ratio
84.5
%
72.1
%
12.4 pts
Expense ratio
28.2
%
26.3
%
1.9 pts
Combined ratio
112.7
%
98.4
%
14.3 pts
Effect on the combined ratio of:
Catastrophe losses
14.7
%
4.8
%
9.9 pts
Prior years’ reserve development(1)
—
%
—
%
— pts
Combined ratio excluding the effects of
catastrophe losses and prior years’ reserve development (underlying
combined ratio)*
98.0
%
93.6
%
4.4 pts
Risks in force (in thousands)
535
547
-2.2
%
Auto(2)
365
372
-1.9
%
Property
170
175
-2.9
%
Household Retention - LTM
Auto(3)
87.0
%
86.5
%
0.5 pts
Property(3)
89.8
%
89.3
%
0.5 pts
N.M. - Not meaningful.
(1) (Favorable) unfavorable.
(2) Includes assumed risks in force of
4.
(3) Retention is based on retained
households. History has been restated to reflect this change.
HORACE MANN EDUCATORS
CORPORATION
Business Segment Overview
(Unaudited)
($ in millions)
Three Months Ended
March 31,
2023
2022
Change
Life & Retirement
Net premiums written and contract
deposits*
$
136.1
$
136.4
-0.2
%
Net premiums and contract charges
earned
37.7
35.8
5.3
%
Net investment income
87.9
84.2
4.4
%
Other income
3.9
4.9
-20.4
%
Death benefits / mortality cost(1)
19.5
21.4
-8.9
%
Interest credited
47.9
39.6
21.0
%
Change in reserves
13.8
13.0
6.2
%
Operating expenses
24.2
25.7
-5.8
%
DAC amortization expense
6.8
5.7
19.3
%
Intangible asset amortization expense
0.1
0.3
-66.7
%
Income before income taxes
17.2
19.2
-10.4
%
Income tax expense
3.2
3.6
-11.1
%
Net income / core earnings*
14.0
15.6
-10.3
%
Adjusted core earnings*
14.0
15.8
-11.4
%
Life policies in force (in thousands)
162
163
-0.6
%
Life insurance in force
$
20,155
$
19,595
2.9
%
Lapse ratio - 12 months(1)
4.1
%
3.8
%
0.3 pts
Annuity contracts in force (in
thousands)
226
229
-1.3
%
Horace Mann Retirement Advantage®
contracts in force (in thousands)
17
16
6.3
%
Total Persistency - LTM
93.1
%
94.3
%
-1.2 pts
N.M. - Not meaningful.
(1) Ordinary life insurance.
HORACE MANN EDUCATORS
CORPORATION
Business Segment Overview
(Unaudited)
($ in millions)
Three Months Ended
March 31,
2023
2022
Change
Supplemental & Group
Benefits
Net premiums and contract charges
earned
$
65.8
$
69.8
-5.7
%
Net investment income
9.1
7.1
28.2
%
Other income
(3.7
)
1.6
N.M.
Benefits, settlement expenses and change
in reserves
21.1
32.5
-35.1
%
Interest credited
0.8
0.1
N.M.
Operating expenses (includes DAC
amortization expense)
27.9
25.3
10.3
%
Intangible asset amortization expense
3.6
3.9
-7.7
%
Income before income taxes
17.8
16.7
6.6
%
Net income / core earnings*
14.0
13.2
6.1
%
Adjusted core earnings*
16.9
16.2
4.3
%
Benefit ratio(1)
33.3
%
46.7
%
-13.4 pts
Operating expense ratio(2)
39.2
%
32.2
%
7.0 pts
Pretax profit margin(3)
24.9
%
21.4
%
3.5 pts
Worksite Direct products benefit ratio
22.1
%
22.2
%
-0.1 pts
Worksite Direct premium persistency
(rolling 12 months)
90.6
%
92.1
%
-1.5 pts
Employer-sponsored products benefit
ratio
42.6
%
65.9
%
-23.3 pts
N.M. - Not meaningful.
(1) Ratio of benefits to net premiums
earned.
(2) Ratio of operating expenses to total
revenues.
(3) Ratio of income before taxes to total
revenues.
($ in millions)
Three Months Ended
March 31,
2023
2022
Change
Corporate & Other(1)
Components of loss before tax:
Net investment losses
$
(3.9
)
$
(15.5
)
N.M.
Interest expense
(6.7
)
(3.9
)
-71.8
%
Other operating expenses, net investment
income and other income
(1.7
)
(2.0
)
15.0
%
Loss before income taxes
(12.3
)
(21.4
)
42.5
%
Net loss
(9.8
)
(17.0
)
42.4
%
Core loss*
(6.7
)
(4.8
)
-39.6
%
N.M. - Not meaningful.
(1) The Corporate & Other segment
includes interest expense on debt and the impact of investment
gains and losses and other corporate level items. The Company does
not allocate the impact of corporate level transactions to the
insurance segments consistent with how management evaluates the
results of those segments.
HORACE MANN EDUCATORS
CORPORATION
Business Segment Overview
(Unaudited)
($ in millions)
Three Months Ended
March 31,
2023
2022
% Change
Investments
Life & Retirement
Fixed maturity securities, at fair value
(amortized cost, net 2023, $4,441.4; 2022, $4,640.3)
$
4,086.8
$
4,660.0
-12.3
%
Equity securities, at fair value
74.4
99.5
-25.2
%
Short-term investments
38.7
15.4
151.3
%
Policy loans
138.8
140.1
-0.9
%
Limited partnership interests
753.0
567.3
32.7
%
Other investments
67.6
60.5
11.7
%
Total Life & Retirement
investments
5,159.3
5,542.8
-6.9
%
Property & Casualty
Fixed maturity securities, at fair value
(amortized cost, net 2023, $603.1; 2022, $629.6)
575.0
640.7
-10.3
%
Equity securities, at fair value
17.4
18.1
-3.9
%
Short-term investments
1.2
3.4
-64.7
%
Limited partnership interests
187.8
182.7
2.8
%
Other investments
1.0
1.1
-9.1
%
Total Property & Casualty
investments
782.4
846.0
-7.5
%
Supplemental & Group Benefits
Fixed maturity securities, at fair value
(amortized cost, net 2023, $758.6; 2022, $700.8)
688.0
686.7
0.2
%
Equity securities, at fair value
6.0
8.2
-26.8
%
Short-term investments
27.7
108.0
-74.4
%
Policy loans
0.8
0.9
-11.1
%
Limited partnership interests
104.6
51.9
101.5
%
Other investments
7.9
7.5
5.3
%
Total Supplemental & Group Benefits
investments
835.0
863.2
-3.3
%
Corporate & Other
Fixed maturity securities, at fair value
(amortized cost, net 2023, $0.2; 2022, $0.0)
0.2
—
N.M.
Equity securities, at fair value
1.0
1.0
—
%
Short-term investments
7.4
0.1
N.M.
Total Corporate & Other
investments
8.6
1.1
681.8
%
Total investments
$
6,785.3
$
7,253.1
-6.4
%
Net investment income - investment
portfolio
Before tax
$
74.7
$
73.0
2.3
%
After tax
59.3
58.1
2.1
%
Investment income - deposit asset on
reinsurance
Before tax
$
25.7
24.9
3.2
%
After tax
20.3
19.7
3.0
%
N.M. - Not meaningful.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20230502005972/en/
Heather J. Wietzel, Vice President, Investor Relations
217-788-5144 | investorrelations@horacemann.com
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