HMN Horace Mann Educators Corporation

Horace Mann Financial Highlights

Three months ended

March 31,

($ in millions, except per share amounts)

2012

2011 (A)

Change

Total revenues

$244.7

$244.6

-

Net income

26.7

25.8

3.5%

Net income per diluted share

0.64

0.62

3.2%

Operating income*

26.4

22.1

19.5%

Operating income per diluted share*

0.64

0.53

20.8%

Book value per share

27.37

21.80

25.6%

Book value per share excluding

the fair value adjustment for investments*

20.31

19.10

6.3%

Property and Casualty segment net income

13.2

12.4

6.5%

    Property and Casualty combined ratio

95.0%

95.0%

-

    Property and Casualty underlying combined ratio*

93.6%

91.2%

2.4 pts

Annuity segment net income

$ 11.6

$ 8.4

38.1%

Life segment net income

5.2

4.2

23.8%

* These measures are not based on accounting principles generally accepted in the United States ("non-GAAP"). They are reconciled to the most directly comparable GAAP measures in the supplemental numerical pages of this document. 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 SEC.

(A) Effective January 1, 2012, the company adopted new accounting guidance for deferred policy acquisition costs with the effects applied retrospectively. The adoption of this accounting guidance did not have a material effect on the company's results of operations, but did decrease shareholders' equity $31.6 million, or 2.9%, after tax at January 1, 2012.

HORACE MANN EDUCATORS CORPORATION

Financial Highlights (Unaudited)

(Dollars in Millions, Except Per Share Data)

Three Months Ended

March 31,

2012

2011 (A)

% Change

EARNINGS SUMMARY

Net income

$      26.7

$      25.8

3.5%

Net realized investment gains, after tax

0.3

3.7

-91.9%

Operating income (B)

26.4

22.1

19.5%

Per diluted share:

Net income

$      0.64

$      0.62

3.2%

Net realized investment gains, after tax

$            -

$      0.09

-100.0%

Operating income (B)

$      0.64

$      0.53

20.8%

Weighted average number of shares 

and equivalent shares (in millions) - Diluted

41.5

41.7

-0.5%

Return on equity (C)

7.3%

9.9%

N.M.

OPERATIONS

Insurance premiums written and contract deposits

$    242.8

$    244.1

-0.5%

Property & Casualty combined ratio

95.0%

95.0%

N.M.

Property & Casualty combined ratio excluding

the effects of catastrophe costs and prior years'

reserve development ("underlying combined ratio") (B)

93.6%

91.2%

N.M.

FINANCIAL POSITION

Per share (D):

Book value

$    27.37

$    21.80

25.6%

Effect of the fair value adjustment for investments (E)

$      7.06

$      2.70

161.5%

Book value excluding the fair value adjustment for investments (B)

$    20.31

$    19.10

6.3%

Dividends paid

$      0.13

$      0.11

18.2%

Total assets

$ 7,697.7

$ 7,123.1

8.1%

Short-term debt

38.0

38.0

-

Long-term debt

199.8

199.7

0.1%

Total shareholders' equity

1,088.8

867.1

25.6%

ADDITIONAL INFORMATION

Exclusive agencies (F)

555

485

14.4%

Employee agents (G)

172

262

-34.4%

Total

727

747

-2.7%

N.M. - Not meaningful.

(A)

Adjusted to reflect the January 1, 2012 adoption and retrospective application by the company of new accounting guidance for

deferred policy acquisition costs.  The adoption of this accounting guidance did not have a material effect on the company's results of

operations, but did decrease shareholders' equity $31.6 million, or 2.9%, after tax at January 1, 2012.

(B)

These measures are not based on accounting principles generally accepted in the United States ("non-GAAP").  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 SEC.

(C)

Based on trailing 12-month net income and average quarter-end shareholders' equity.

(D)

Ending shares outstanding were 39,773,363 at March 31, 2012 and 39,784,429 at March 31, 2011.

(E)

Net of the related impact on deferred policy acquisition costs and the applicable deferred taxes.

(F)

Local Horace Mann agencies created and owned by independent contractors who have signed Exclusive Agent agreements with the

Company ("Exclusive Agents").  Those agreements state that only the Company's products and limited additional third-party vendor

products authorized by the Company will be marketed by the agencies.  An independent contractor may sign multiple Exclusive Agent

agreements with the Company and manage more than one Exclusive Agency.

(G)

Agents who have employee status with the Company and by contract market only the Company's products and limited additional

third-party vendor products authorized by the Company.

- 1 -

HORACE MANN EDUCATORS CORPORATION

Statements of Operations and Supplemental Consolidated Data (Unaudited)

(Dollars in Millions)

Three Months Ended

March 31,

2012

2011 (A)

% Change

STATEMENTS OF OPERATIONS

Insurance premiums and contract charges earned

$    165.5

$    166.7

-0.7%

Net investment income

75.7

70.5

7.4%

Net realized investment gains

0.4

5.8

-93.1%

Other income

3.1

1.6

93.8%

Total revenues

244.7

244.6

0.0%

Benefits, claims and settlement expenses

107.9

110.6

-2.4%

Interest credited

40.0

37.4

7.0%

Policy acquisition expenses amortized

17.8

19.2

-7.3%

Operating expenses

37.9

37.1

2.2%

Interest expense

3.6

3.5

2.9%

Total benefits, losses and expenses

207.2

207.8

-0.3%

Income before income taxes

37.5

36.8

1.9%

Income tax expense

10.8

11.0

-1.8%

Net income

$      26.7

$      25.8

3.5%

ANALYSIS OF PREMIUMS WRITTEN

    AND CONTRACT DEPOSITS        __ 

Property & Casualty

Automobile and property (voluntary)

$    127.2

$    128.4

-0.9%

Involuntary and other property & casualty

0.5

0.4

25.0%

Total Property & Casualty

127.7

128.8

-0.9%

Annuity deposits

92.0

92.5

-0.5%

Life

23.1

22.8

1.3%

Total

$    242.8

$    244.1

-0.5%

ANALYSIS OF SEGMENT NET INCOME (LOSS)

Property & Casualty

$      13.2

$      12.4

6.5%

Annuity

11.6

8.4

38.1%

Life

5.2

4.2

23.8%

Corporate and other (B)

(3.3)

0.8

N.M.

Net income

26.7

25.8

3.5%

N.M. - Not meaningful.

(A)

See footnote (A) on page 1 of these supplemental numerical pages.

(B)

The Corporate and Other segment includes interest expense on debt and the impact of realized 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 5.

- 2 -

HORACE MANN EDUCATORS CORPORATION

Supplemental Business Segment Overview (Unaudited)

(Dollars in Millions)

Three Months Ended

March 31,

2012

2011 (A)

% Change

PROPERTY & CASUALTY

Premiums written

$    127.7

$    128.8

-0.9%

Premiums earned

135.0

137.4

-1.7%

Net investment income

8.9

9.2

-3.3%

Other income

1.6

0.2

N.M.

Losses and loss adjustment expenses (LAE)

93.2

95.3

-2.2%

Operating expenses (includes policy

acquisition expenses amortized)

35.1

35.3

-0.6%

Income before tax

17.2

16.2

6.2%

Net income

13.2

12.4

6.5%

Net investment income, after tax

7.5

7.8

-3.8%

Catastrophe costs, after tax (B)

3.8

5.2

-26.9%

Catastrophe losses and LAE, before tax

5.9

8.0

-26.3%

Reinsurance reinstatement premiums, before tax

-

-

-

Prior years' reserves favorable (adverse)

development, pretax

Voluntary automobile

$        3.3

$        2.7

22.2%

Total property

0.7

-

N.M.

Other property and casualty

-

-

-

Total

4.0

2.7

48.1%

Operating statistics:

Loss and loss adjustment expense ratio

69.0%

69.3%

N.M.

Expense ratio

26.0%

25.7%

N.M.

Combined ratio

95.0%

95.0%

N.M.

Effect on the combined ratio of:

Catastrophe costs (B)

4.4%

5.8%

N.M.

Prior years' reserve development

-3.0%

-2.0%

N.M.

Combined ratio excluding the effects of catastrophe

costs and prior years' reserve development

("underlying combined ratio") (C)

93.6%

91.2%

N.M.

N.M. - Not meaningful.

(A)

See footnote (A) on page 1 of these supplemental numerical pages.

(B)

Includes allocated loss adjustment expenses and catastrophe reinsurance reinstatement premiums.

(C)

These measures are not based on accounting principles generally accepted in the United States ("non-GAAP").

See footnote (B) on page 1 of these supplemental numerical pages.

- 3 -

HORACE MANN EDUCATORS CORPORATION

Supplemental Business Segment Overview (Unaudited)

(Dollars in Millions)

Three Months Ended

March 31,

2012

2011 (A)

% Change

PROPERTY & CASUALTY - continued

Additional Operating Information

Automobile and property detail:

Premiums written (voluntary) (B)

$    127.2

$    128.4

-0.9%

Automobile

89.4

92.0

-2.8%

Property

37.8

36.4

3.8%

Premiums earned (voluntary) (B)

134.6

137.3

-2.0%

Automobile

88.7

92.0

-3.6%

Property

45.9

45.3

1.3%

Policies in force (voluntary) (in thousands)

723

748

-3.3%

Automobile

485

500

-3.0%

Property

238

248

-4.0%

Policy renewal rate (voluntary)

Automobile (6 months)

90.7%

90.1%

N.M.

Automobile (12 months)

83.2%

83.2%

N.M.

Property (12 months)

86.4%

85.9%

N.M.

Voluntary automobile operating statistics:

Loss and loss adjustment expense ratio

71.8%

65.6%

N.M.

Expense ratio

27.0%

25.9%

N.M.

Combined ratio

98.8%

91.5%

N.M.

Effect on the combined ratio of:

Catastrophe costs (C)

0.5%

0.2%

N.M.

Prior years' reserve development

-3.7%

-2.9%

N.M.

Combined ratio excluding the effects of catastrophe

costs and prior years' reserve development

("underlying combined ratio") (D)

102.0%

94.2%

N.M.

Total property operating statistics:

Loss and loss adjustment expense ratio

63.1%

76.5%

N.M.

Expense ratio

24.1%

25.4%

N.M.

Combined ratio

87.2%

101.9%

N.M.

Effect on the combined ratio of:

Catastrophe costs (C)

11.9%

17.4%

N.M.

Prior years' reserve development

-1.4%

0.0%

N.M.

Combined ratio excluding the effects of catastrophe

costs and prior years' reserve development

("underlying combined ratio") (D)

76.7%

84.5%

N.M.

N.M. - Not meaningful.

(A)

See footnote (A) on page 1 of these supplemental numerical pages.

(B)

Amounts are net of additional ceded premiums to reinstate the Company's property and casualty catastrophe reinsurance

coverage, if any, as quantified on page 3.

(C)

Includes allocated loss adjustment expenses and catastrophe reinsurance reinstatement premiums.

(D)

These measures are not based on accounting principles generally accepted in the United States ("non-GAAP").

See footnote (B) on page 1 of these supplemental numerical pages.

- 4 -

HORACE MANN EDUCATORS CORPORATION

Supplemental Business Segment Overview (Unaudited)

(Dollars in Millions)

Three Months Ended

March 31,

2012

2011 (A)

% Change

ANNUITY

Contract deposits

$      92.0

$      92.5

-0.5%

Variable

27.2

26.9

1.1%

Fixed

64.8

65.6

-1.2%

Contract charges earned

5.0

4.7

6.4%

Net investment income

49.5

44.2

12.0%

Net interest margin (without realized investment gains and losses)

19.9

17.0

17.1%

Other income

0.7

0.8

-12.5%

Mortality loss and other reserve changes

0.2

(0.2)

N.M.

Operating expenses (includes policy

acquisition expenses amortized)

8.5

9.7

-12.4%

Income before tax

17.3

12.6

37.3%

Net income

11.6

8.4

38.1%

Pretax income increase (decrease) due to

evaluation of:

Deferred policy acquisition costs

$        2.6

$        0.9

188.9%

Guaranteed minimum death benefit reserve

0.2

-

N.M.

Annuity contracts in force (in thousands)

184

181

1.7%

Accumulated value on deposit / Assets under management

$ 4,517.6

$ 4,208.6

7.3%

Variable

1,409.1

1,419.5

-0.7%

Fixed

3,108.5

2,789.1

11.5%

Annuity accumulated value retention - 12 months

Variable accumulations

93.7%

92.3%

N.M.

Fixed accumulations

95.0%

94.4%

N.M.