SPRINGFIELD, Ill., Oct. 22, 2013 /PRNewswire/ -- Horace Mann
Educators Corporation (NYSE:HMN) today reported financial results
for the three and nine months ended September 30, 2013:
Horace Mann Financial
Highlights
|
|
Three months
ended
September
30,
|
|
Nine months
ended
September
30,
|
($ in millions,
except per share
amounts)
|
2013
|
2012
|
Change
|
|
2013
|
2012
|
Change
|
Total
revenues
|
$251.9
|
$256.6
|
-1.8%
|
|
$772.1
|
$755.4
|
2.2%
|
Net income
|
23.6
|
32.2
|
-26.7%
|
|
76.6
|
72.0
|
6.4%
|
Net income per
diluted share
|
0.57
|
0.78
|
-26.9%
|
|
1.85
|
1.74
|
6.3%
|
Operating
income*
|
24.5
|
25.3
|
-3.2%
|
|
63.1
|
58.4
|
8.0%
|
Operating income
per
diluted
share*
|
0.59
|
0.62
|
-4.8%
|
|
1.53
|
1.42
|
7.7%
|
Book value per
share
|
|
|
|
|
27.15
|
31.30
|
-13.3%
|
Book value per share
excluding
the fair value
adjustment
for
investments*
|
|
|
|
|
23.15
|
21.24
|
9.0%
|
Property and Casualty
segment
net income
|
11.1
|
13.5
|
-17.8%
|
|
25.4
|
22.6
|
12.4%
|
Property and
Casualty
combined
ratio
|
97.6%
|
93.0%
|
4.6 pts
|
|
99.4%
|
100.3%
|
-0.9 pts
|
Property and Casualty
underlying
combined
ratio*
|
94.0%
|
91.2%
|
2.8 pts
|
|
92.8%
|
93.2%
|
-0.4 pts
|
Annuity segment net
income
|
$ 11.6
|
$
9.9
|
17.2%
|
|
$
31.9
|
$
29.4
|
8.5%
|
Life segment net
income
|
5.8
|
4.9
|
18.4%
|
|
15.7
|
16.2
|
-3.1%
|
* 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.
|
"Horace Mann's third quarter
operating income was $0.59 per share,
a solid result across all three business segments of our multiline
insurance platform," said Horace
Mann's President and CEO Marita
Zuraitis. "Compared to the third quarter and first
nine months of 2012, property and casualty written premiums
increased 4%, while the year-to-date combined ratio was in line
with our expectations. In our annuity segment, assets under
management increased 11% over prior year, and the interest spread
remained just below 2%. In the life segment, third quarter
sales of Horace Mann products
increased significantly compared to a year earlier, with the growth
in earnings reflecting better than anticipated mortality
losses."
"Primarily due to stronger than anticipated earnings in our
annuity and life segments and lower than expected third quarter
catastrophe losses, we are revising our estimate of full-year 2013
operating income to between $1.95 and
$2.05 per share," stated Zuraitis.
Property and Casualty Segment
The property and casualty segment recorded net income of
$11.1 million for the current quarter
compared to $13.5 million for the
same period in 2012. The total property and casualty combined
ratio of 97.6% was 4.6 percentage points higher than the third
quarter of 2012. Pretax catastrophe losses in the current
quarter of $9.1 million, or 6.4
points, increased $3.7 million, or
2.4 points, compared to a year ago. Favorable prior years'
reserve development of $4.0 million,
or 2.8 points, was recorded in the third quarter, compared to
$3.0 million, or 2.2 points, of
favorable development recorded in the third quarter of 2012.
The underlying property and casualty combined ratio of 94.0%
increased 2.8 percentage points compared to the prior year quarter,
reflecting an increase in the overall expense ratio and a decrease
in current accident year auto results.
For the nine months, property and casualty net income of
$25.4 million increased 12% compared
to the same period in 2012, primarily due to a reduction in
catastrophe losses. The year-to-date combined ratio and
underlying combined ratio of 99.4% and 92.8%, respectively,
improved 0.9 percentage points and 0.4 percentage points compared
to the first nine months of 2012. This combined ratio
improvement reflected a decrease in the underlying loss ratio,
partially offset by an anticipated increase in the expense
ratio.
Total property and casualty written premiums of $152.5 million and $428.6
million each increased 4% compared to the three and nine
months ended September 30, 2012,
respectively, primarily driven by increases in average premium per
policy for both property and auto.
Horace Mann's property and
casualty sales increased 9% and 8% compared to the three and nine
months ended September 30, 2012,
respectively, reflecting growth from both auto and property new
business. Policy retention continues to be strong with the
auto policy retention rate for the current period at 85%,
approximately 1 percentage point higher than prior year, while the
property policy retention rate of 89% was consistent compared to a
year ago.
Annuity Segment
Annuity segment net income of $11.6
million and $31.9 million for
the three and nine months ended September
30, 2013, respectively, increased $1.7 million and $2.5
million compared to the comparable periods in 2012.
The net interest spread of 198 basis points on fixed annuity assets
was consistent with the first half of 2013, but decreased 13 basis
points compared to the prior year. However, on a year-to-date
basis, the net interest spread decline was more than offset by the
increase in fixed annuity assets under management, with the
resulting net interest margin increasing 1% compared to the first
nine months of 2012. The deferred policy acquisition costs
unlocking in the quarter had a $1.3
million pretax positive impact on annuity segment earnings
compared to a $0.5 million pretax
positive impact in the prior year, with the improvement primarily
due to financial market performance. For the nine months
ended September 30, 2013 and 2012,
unlocking had positive impacts of $1.9
million and $1.3 million,
respectively. Total annuity accumulated account value of
$5.2 billion increased 11% compared
to September 30, 2012, and total cash
value persistency remained consistent with the prior period at
94.9%.
For the three and nine months ended September 30, 2013, annuity deposits received of
$128.2 million and $316.8 million increased 12% and 5%,
respectively, compared to the prior year periods, primarily due to
growth in single premium and rollover deposits received in the
current periods.
Annuity sales by Horace Mann's
agency force increased 21% and 12% compared to the third quarter
and first nine months of 2012, respectively, while sales from the
supplemental independent agent distribution channel declined
approximately 25%. In total, Horace
Mann's annuity sales for the current quarter and nine months
increased 13% and 5% compared to the prior year three and nine
months, respectively.
Life Segment
Life segment net income of $5.8
million for the third quarter increased $0.9 million compared to the prior year, while
net income of $15.7 million for the
nine months decreased $0.5 million
compared to the same period in 2012 reflecting more normalized
mortality losses in the current year-to-date period.
Life segment insurance premiums and contract deposits of
$25.3 million and $73.4 million increased 5% and 2% compared to the
three and nine months ended September 30,
2012, respectively. Life persistency of 96% was
comparable to 12 months earlier.
New life sales continued to be strong compared to the prior
year, with growth rates of 87% and 50% for the three and nine
months, respectively, in sales of Horace
Mann-manufactured products. This new business growth
is consistent with the company's strategic intent to significantly
increase its underwritten, mortality-based business.
Investment Results
Total net investment income increased 2% compared to both the
three and nine months ended September
30, 2012. Pretax net realized investment losses were
$1.4 million in the current
quarter. For the first nine months of 2013, pretax realized
investment gains were $20.9
million.
Horace Mann's net unrealized
investment gains on fixed maturity and equity securities of
$281.3 million at September 30, 2013 decreased 18% compared to the
$344.5 million net unrealized gain at
June 30, 2013, primarily due to the
increase in interest rates during the current quarter. Net
unrealized gains were $651.9 million
at December 31, 2012 and $647.7 million at September 30, 2012.
Capital Management
During the third quarter of 2013, the company repurchased a
negligible number of shares of its common stock under its
$50 million share repurchase
program. As of September 30,
2013, the program had a remaining authorization of
$28.4 million. There were
40,119,207 shares outstanding on September
30, 2013.
Webcast Conference Call
Horace Mann's senior management
will discuss the company's third quarter financial results with
investors and analysts on October 23,
2013 at 9:30 a.m. Eastern
Time. The conference call will be webcast live on the
Internet at investors.horacemann.com and archived later in the day
for replay, which will be available for one month.
Horace Mann -- the largest
national multiline insurance company focusing on educators'
financial needs -- provides auto and homeowners insurance,
retirement annuities, life insurance and other financial
solutions. Founded by Educators for
Educators® in 1945, the company is headquartered in
Springfield, Ill. For more
information, visit www.horacemann.com.
Statements included in this news release that are not historical
in nature are forward-looking within the meaning of the Private
Securities Litigation Reform Act of 1995 and are subject to certain
risks and uncertainties. Horace Mann is not under any
obligation to (and expressly disclaims any such obligation to)
update or revise any forward-looking statements, whether as a
result of new information, future events or otherwise. Please
refer to the company's Quarterly Report on Form 10-Q for the period
ended June 30, 2013 and the company's
past and future filings and reports filed with the Securities and
Exchange Commission for information concerning the important
factors that could cause actual results to differ materially from
those in forward-looking statements. The information
contained in this press release includes financial measures which
are based on methodologies other than United States generally accepted accounting
principles ("GAAP"). Reconciliations of non-GAAP measures to
the closest GAAP measures are contained in the supplemental
numerical pages of this release and additional descriptions of the
non-GAAP measures are contained in the Glossary of Selected Terms
included as an exhibit to the company's SEC filings.
HORACE MANN
EDUCATORS CORPORATION
|
Financial Highlights
(Unaudited)
|
(Dollars in Millions,
Except Per Share Data)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months
Ended
|
|
|
|
Nine Months
Ended
|
|
|
|
|
|
|
September
30,
|
|
|
|
September
30,
|
|
|
|
|
|
|
2013
|
|
2012
|
|
% Change
|
|
2013
|
|
2012
|
|
% Change
|
EARNINGS
SUMMARY
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income
|
$
23.6
|
|
$
32.2
|
|
-26.7%
|
|
$
76.6
|
|
$
72.0
|
|
6.4%
|
|
Net realized
investment gains (losses), after tax
|
(0.9)
|
|
6.9
|
|
N.M.
|
|
13.5
|
|
13.6
|
|
-0.7%
|
Operating income
(A)
|
24.5
|
|
25.3
|
|
-3.2%
|
|
63.1
|
|
58.4
|
|
8.0%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Per diluted
share:
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income
|
$
0.57
|
|
$
0.78
|
|
-26.9%
|
|
$
1.85
|
|
$
1.74
|
|
6.3%
|
|
|
Net realized
investment gains (losses), after tax
|
$ (0.02)
|
|
$
0.16
|
|
N.M.
|
|
$
0.32
|
|
$
0.32
|
|
-
|
|
Operating income
(A)
|
$
0.59
|
|
$
0.62
|
|
-4.8%
|
|
$
1.53
|
|
$
1.42
|
|
7.7%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average
number of shares
|
|
|
|
|
|
|
|
|
|
|
|
|
and equivalent shares
(in millions) - Diluted
|
41.7
|
|
41.1
|
|
1.5%
|
|
41.4
|
|
41.3
|
|
0.2%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
RETURN ON
EQUITY
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income return on
equity (B)
|
|
|
|
|
|
|
9.1%
|
|
9.5%
|
|
N.M.
|
Operating income
return on equity excluding the fair value
|
|
|
|
|
|
|
|
|
|
|
|
|
adjustment for
investments (A) (C)
|
|
|
|
|
|
|
10.3%
|
|
11.0%
|
|
N.M.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
FINANCIAL
POSITION
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Per share
(D):
|
|
|
|
|
|
|
|
|
|
|
|
|
Book value
|
|
|
|
|
|
|
$
27.15
|
|
$
31.30
|
|
-13.3%
|
|
|
Effect of the fair
value adjustment for investments (E)
|
|
|
|
|
|
|
$
4.00
|
|
$
10.06
|
|
-60.2%
|
|
Book value excluding
the fair value adjustment for investments (A)
|
|
|
|
|
|
|
$
23.15
|
|
$
21.24
|
|
9.0%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Dividends
paid
|
$ 0.195
|
|
$
0.13
|
|
50.0%
|
|
$
0.585
|
|
$
0.39
|
|
50.0%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Ending number of
shares outstanding (in millions) (D)
|
|
|
|
|
|
|
40.1
|
|
39.4
|
|
1.8%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
assets
|
|
|
|
|
|
|
$ 8,522.7
|
|
$ 8,122.2
|
|
4.9%
|
Short-term
debt
|
|
|
|
|
|
|
38.0
|
|
38.0
|
|
-
|
Long-term
debt
|
|
|
|
|
|
|
199.9
|
|
199.8
|
|
0.1%
|
Total shareholders'
equity
|
|
|
|
|
|
|
1,089.3
|
|
1,232.4
|
|
-11.6%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
ADDITIONAL
INFORMATION
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Exclusive agencies
(F)
|
|
|
|
|
|
|
620
|
|
590
|
|
5.1%
|
Employee agents
(G)
|
|
|
|
|
|
|
116
|
|
142
|
|
-18.3%
|
|
Total
|
|
|
|
|
|
|
|
736
|
|
732
|
|
0.5%
|
|
N.M. - Not
meaningful.
|
(A)
|
|
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.
|
(B)
|
|
Based on trailing
12-month net income and average quarter-end shareholders'
equity.
|
(C)
|
|
Based on trailing
12-month operating income 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 the
applicable deferred taxes.
|
(D)
|
|
Ending shares
outstanding were 40,119,207 at September 30, 2013 and 39,378,349 at
September 30, 2012.
|
(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
|
|
|
|
Nine Months
Ended
|
|
|
|
|
|
|
September
30,
|
|
|
|
September
30,
|
|
|
|
|
|
|
2013
|
|
2012
|
|
% Change
|
|
2013
|
|
2012
|
|
% Change
|
STATEMENTS OF
OPERATIONS
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Insurance premiums
and contract charges earned
|
$ 173.8
|
|
$ 167.9
|
|
3.5%
|
|
$
514.5
|
|
$
499.7
|
|
3.0%
|
Net investment
income
|
78.4
|
|
76.7
|
|
2.2%
|
|
233.2
|
|
228.7
|
|
2.0%
|
Net realized
investment gains (losses)
|
(1.4)
|
|
10.8
|
|
N.M.
|
|
20.9
|
|
21.1
|
|
-0.9%
|
Other
income
|
1.1
|
|
1.2
|
|
-8.3%
|
|
3.5
|
|
5.9
|
|
-40.7%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
revenues
|
251.9
|
|
256.6
|
|
-1.8%
|
|
772.1
|
|
755.4
|
|
2.2%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Benefits, claims and
settlement expenses
|
112.7
|
|
106.0
|
|
6.3%
|
|
346.2
|
|
344.9
|
|
0.4%
|
Interest
credited
|
42.9
|
|
41.4
|
|
3.6%
|
|
126.4
|
|
121.8
|
|
3.8%
|
Policy acquisition
expenses amortized
|
20.9
|
|
20.4
|
|
2.5%
|
|
64.0
|
|
60.5
|
|
5.8%
|
Operating
expenses
|
41.4
|
|
38.1
|
|
8.7%
|
|
119.2
|
|
114.5
|
|
4.1%
|
Interest
expense
|
3.6
|
|
3.6
|
|
-
|
|
10.7
|
|
10.7
|
|
-
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total benefits,
losses and expenses
|
221.5
|
|
209.5
|
|
5.7%
|
|
666.5
|
|
652.4
|
|
2.2%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income before income
taxes
|
30.4
|
|
47.1
|
|
-35.5%
|
|
105.6
|
|
103.0
|
|
2.5%
|
|
Income tax
expense
|
6.8
|
|
14.9
|
|
-54.4%
|
|
29.0
|
|
31.0
|
|
-6.5%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income
|
$
23.6
|
|
$
32.2
|
|
-26.7%
|
|
$
76.6
|
|
$
72.0
|
|
6.4%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
PREMIUMS WRITTEN
AND CONTRACT DEPOSITS
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Property &
Casualty
|
|
|
|
|
|
|
|
|
|
|
|
|
Automobile and
property (voluntary)
|
$ 151.7
|
|
$ 145.7
|
|
4.1%
|
|
$
426.3
|
|
$
411.4
|
|
3.6%
|
|
Involuntary and other
property & casualty
|
0.8
|
|
0.8
|
|
-
|
|
2.3
|
|
2.2
|
|
4.5%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Property &
Casualty
|
152.5
|
|
146.5
|
|
4.1%
|
|
428.6
|
|
413.6
|
|
3.6%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Annuity
deposits
|
128.2
|
|
114.5
|
|
12.0%
|
|
316.8
|
|
302.9
|
|
4.6%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Life
|
|
|
25.3
|
|
24.2
|
|
4.5%
|
|
73.4
|
|
71.7
|
|
2.4%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
$ 306.0
|
|
$ 285.2
|
|
7.3%
|
|
$
818.8
|
|
$
788.2
|
|
3.9%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
SEGMENT NET INCOME
(LOSS)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Property &
Casualty
|
$
11.1
|
|
$
13.5
|
|
-17.8%
|
|
$
25.4
|
|
$
22.6
|
|
12.4%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Annuity
|
|
11.6
|
|
9.9
|
|
17.2%
|
|
31.9
|
|
29.4
|
|
8.5%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Life
|
|
|
5.8
|
|
4.9
|
|
18.4%
|
|
15.7
|
|
16.2
|
|
-3.1%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Corporate and other
(A)
|
(4.9)
|
|
3.9
|
|
N.M.
|
|
3.6
|
|
3.8
|
|
-5.3%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income
|
23.6
|
|
32.2
|
|
-26.7%
|
|
76.6
|
|
72.0
|
|
6.4%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
N.M. - Not
meaningful.
|
(A)
|
|
|
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
|
|
|
|
Nine Months
Ended
|
|
|
|
|
|
|
September
30,
|
|
|
|
September
30,
|
|
|
|
|
|
|
2013
|
|
2012
|
|
% Change
|
|
2013
|
|
2012
|
|
% Change
|
PROPERTY &
CASUALTY
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Premiums
written
|
$ 152.5
|
|
$ 146.5
|
|
4.1%
|
|
$
428.6
|
|
$
413.6
|
|
3.6%
|
Premiums
earned
|
140.8
|
|
136.9
|
|
2.8%
|
|
418.2
|
|
407.5
|
|
2.6%
|
Net investment
income
|
8.8
|
|
9.0
|
|
-2.2%
|
|
26.9
|
|
27.2
|
|
-1.1%
|
Other income
(expense)
|
0.2
|
|
(0.1)
|
|
N.M.
|
|
0.2
|
|
1.5
|
|
-86.7%
|
Losses and loss
adjustment expenses (LAE)
|
97.6
|
|
90.6
|
|
7.7%
|
|
300.1
|
|
300.3
|
|
-0.1%
|
Operating expenses
(includes policy
|
|
|
|
|
|
|
|
|
|
|
|
|
acquisition expenses
amortized)
|
39.8
|
|
36.7
|
|
8.4%
|
|
115.5
|
|
108.2
|
|
6.7%
|
Income before
tax
|
12.4
|
|
18.5
|
|
-33.0%
|
|
29.7
|
|
27.7
|
|
7.2%
|
Net income
|
11.1
|
|
13.5
|
|
-17.8%
|
|
25.4
|
|
22.6
|
|
12.4%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net investment
income, after tax
|
7.5
|
|
7.6
|
|
-1.3%
|
|
22.8
|
|
23.1
|
|
-1.3%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Catastrophe costs
(A)
|
|
|
|
|
|
|
|
|
|
|
|
|
After tax
|
5.9
|
|
3.5
|
|
68.6%
|
|
24.2
|
|
26.3
|
|
-8.0%
|
|
Before tax
|
9.1
|
|
5.4
|
|
68.5%
|
|
37.3
|
|
40.5
|
|
-7.9%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Prior years' reserves
favorable (adverse)
|
|
|
|
|
|
|
|
|
|
|
|
|
development, before
tax
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Voluntary
automobile
|
3.8
|
|
2.4
|
|
58.3%
|
|
9.7
|
|
9.1
|
|
6.6%
|
|
|
Total
property
|
0.2
|
|
0.6
|
|
-66.7%
|
|
0.2
|
|
2.4
|
|
-91.7%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
4.0
|
|
3.0
|
|
33.3%
|
|
9.9
|
|
11.5
|
|
-13.9%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating
statistics:
|
|
|
|
|
|
|
|
|
|
|
|
|
Loss and loss
adjustment expense ratio
|
69.3%
|
|
66.2%
|
|
N.M.
|
|
71.8%
|
|
73.7%
|
|
N.M.
|
|
Expense
ratio
|
28.3%
|
|
26.8%
|
|
N.M.
|
|
27.6%
|
|
26.6%
|
|
N.M.
|
|
Combined
ratio
|
97.6%
|
|
93.0%
|
|
N.M.
|
|
99.4%
|
|
100.3%
|
|
N.M.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Effect on the
combined ratio of:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Catastrophe costs
(A)
|
6.4%
|
|
4.0%
|
|
N.M.
|
|
9.0%
|
|
10.0%
|
|
N.M.
|
|
|
|
Prior years' reserve
development
|
-2.8%
|
|
-2.2%
|
|
N.M.
|
|
-2.4%
|
|
-2.9%
|
|
N.M.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Combined ratio
excluding the effects of catastrophe
|
|
|
|
|
|
|
|
|
|
|
|
|
|
costs and prior
years' reserve development
|
|
|
|
|
|
|
|
|
|
|
|
|
|
("underlying combined
ratio") (B)
|
94.0%
|
|
91.2%
|
|
N.M.
|
|
92.8%
|
|
93.2%
|
|
N.M.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Policies in force
(voluntary) (in thousands)
|
|
|
|
|
|
|
722
|
|
725
|
|
-0.4%
|
|
Automobile
|
|
|
|
|
|
|
486
|
|
488
|
|
-0.4%
|
|
Property
|
|
|
|
|
|
|
236
|
|
237
|
|
-0.4%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Policy renewal rate
(voluntary) - 12 months
|
|
|
|
|
|
|
|
|
|
|
|
|
Automobile
|
|
|
|
|
|
|
85.0%
|
|
84.3%
|
|
N.M.
|
|
Property
|
|
|
|
|
|
|
89.2%
|
|
89.3%
|
|
N.M.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
N.M. - Not
meaningful.
|
(A)
|
|
|
Includes allocated
loss adjustment expenses and, when applicable, catastrophe
reinsurance reinstatement premiums. For the periods presented, there were no reinsurance
reinstatement premiums.
|
(B)
|
|
|
These measures are
not based on accounting principles generally accepted in the United
States ("non-GAAP"). See footnote
(A) on page 1 of these supplemental numerical pages.
|
|
|
|
|
- 3 -
|
HORACE MANN
EDUCATORS CORPORATION
|
Supplemental Business
Segment Overview (Unaudited)
|
(Dollars in
Millions)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months
Ended
|
|
|
|
Nine Months
Ended
|
|
|
|
|
|
|
September
30,
|
|
|
|
September
30,
|
|
|
|
|
|
|
2013
|
|
2012
|
|
% Change
|
|
2013
|
|
2012
|
|
% Change
|
ANNUITY
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Contract
deposits
|
$ 128.2
|
|
$ 114.5
|
|
12.0%
|
|
$
316.8
|
|
$
302.9
|
|
4.6%
|
|
Variable
|
31.5
|
|
25.9
|
|
21.6%
|
|
97.1
|
|
83.2
|
|
16.7%
|
|
Fixed
|
96.7
|
|
88.6
|
|
9.1%
|
|
219.7
|
|
219.7
|
|
-
|
Contract charges
earned
|
5.9
|
|
5.5
|
|
7.3%
|
|
16.7
|
|
16.0
|
|
4.4%
|
Net investment
income
|
52.1
|
|
50.7
|
|
2.8%
|
|
154.8
|
|
150.0
|
|
3.2%
|
Interest
credited
|
32.2
|
|
30.8
|
|
4.5%
|
|
94.3
|
|
90.3
|
|
4.4%
|
|
Net interest margin
(without realized investment gains/losses)
|
19.9
|
|
19.9
|
|
-
|
|
60.5
|
|
59.7
|
|
1.3%
|
Other
income
|
0.6
|
|
0.9
|
|
-33.3%
|
|
2.3
|
|
2.4
|
|
-4.2%
|
Mortality loss and
other reserve changes
|
(0.4)
|
|
(1.2)
|
|
-66.7%
|
|
(1.4)
|
|
(2.3)
|
|
-39.1%
|
Operating expenses
(includes policy
|
|
|
|
|
|
|
|
|
|
|
|
|
acquisition expenses
amortized)
|
10.2
|
|
10.2
|
|
-
|
|
32.2
|
|
31.8
|
|
1.3%
|
Income before
tax
|
15.8
|
|
14.9
|
|
6.0%
|
|
45.9
|
|
44.0
|
|
4.3%
|
Net income
|
11.6
|
|
9.9
|
|
17.2%
|
|
31.9
|
|
29.4
|
|
8.5%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Pretax income
increase (decrease) due to
|
|
|
|
|
|
|
|
|
|
|
|
|
evaluation
of:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Deferred policy
acquisition costs
|
$
1.3
|
|
$
0.5
|
|
160.0%
|
|
$
1.9
|
|
$
1.3
|
|
46.2%
|
|
|
Guaranteed minimum
death benefit reserve
|
-
|
|
0.1
|
|
-100.0%
|
|
0.1
|
|
0.2
|
|
-50.0%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Annuity contracts in
force (in thousands)
|
|
|
|
|
|
|
192
|
|
186
|
|
3.2%
|
Accumulated value on
deposit / Assets under management
|
|
|
|
|
|
|
$ 5,186.7
|
|
$ 4,687.7
|
|
10.6%
|
|
Variable
|
|
|
|
|
|
|
1,627.7
|
|
1,405.7
|
|
15.8%
|
|
Fixed
|
|
|
|
|
|
|
3,559.0
|
|
3,282.0
|
|
8.4%
|
Annuity accumulated
value retention - 12 months
|
|
|
|
|
|
|
|
|
|
|
|
|
Variable
accumulations
|
|
|
|
|
|
|
93.9%
|
|
94.5%
|
|
N.M.
|
|
Fixed
accumulations
|
|
|
|
|
|
|
95.3%
|
|
95.3%
|
|
N.M.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
LIFE
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Premiums and contract
deposits
|
$
25.3
|
|
$
24.2
|
|
4.5%
|
|
$
73.4
|
|
$
71.7
|
|
2.4%
|
Premiums and contract
charges earned
|
27.1
|
|
25.5
|
|
6.3%
|
|
79.6
|
|
76.2
|
|
4.5%
|
Net investment
income
|
17.7
|
|
17.2
|
|
2.9%
|
|
52.2
|
|
52.2
|
|
-
|
Other
income
|
0.3
|
|
0.4
|
|
-25.0%
|
|
1.0
|
|
2.0
|
|
-50.0%
|
Death
benefits/mortality cost/change in reserves
|
14.7
|
|
14.2
|
|
3.5%
|
|
44.7
|
|
42.3
|
|
5.7%
|
Interest
credited
|
10.7
|
|
10.6
|
|
0.9%
|
|
32.1
|
|
31.5
|
|
1.9%
|
Operating expenses
(includes policy
|
|
|
|
|
|
|
|
|
|
|
|
|
acquisition expenses
amortized)
|
10.8
|
|
10.6
|
|
1.9%
|
|
31.7
|
|
31.2
|
|
1.6%
|
Income before
tax
|
8.9
|
|
7.7
|
|
15.6%
|
|
24.3
|
|
25.4
|
|
-4.3%
|
Net income
|
5.8
|
|
4.9
|
|
18.4%
|
|
15.7
|
|
16.2
|
|
-3.1%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Pretax income
increase (decrease) due to
|
|
|
|
|
|
|
|
|
|
|
|
|
evaluation
of:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Deferred policy
acquisition costs
|
$
-
|
|
$
(0.1)
|
|
-100.0%
|
|
$
(0.1)
|
|
$
(0.3)
|
|
-66.7%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Life policies in
force (in thousands)
|
|
|
|
|
|
|
199
|
|
201
|
|
-1.0%
|
Life insurance in
force
|
|
|
|
|
|
|
$
14,940
|
|
$
14,522
|
|
2.9%
|
Lapse ratio - 12
months
|
|
|
|
|
|
|
|
|
|
|
|
|
(Ordinary life
insurance)
|
|
|
|
|
|
|
4.4%
|
|
4.2%
|
|
N.M.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
CORPORATE AND
OTHER (A)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Components of income
(loss) before tax:
|
|
|
|
|
|
|
|
|
|
|
|
|
Net realized
investment gains (losses)
|
$
(1.4)
|
|
$
10.8
|
|
N.M.
|
|
$
20.9
|
|
$
21.1
|
|
-0.9%
|
|
Interest
expense
|
(3.6)
|
|
(3.6)
|
|
-
|
|
(10.7)
|
|
(10.7)
|
|
-
|
|
Other operating
expenses, net investment income
|
|
|
|
|
|
|
|
|
|
|
|
|
|
and other
income
|
(1.7)
|
|
(1.2)
|
|
41.7%
|
|
(4.5)
|
|
(4.5)
|
|
-
|
Income (loss) before
tax
|
(6.7)
|
|
6.0
|
|
N.M.
|
|
5.7
|
|
5.9
|
|
-3.4%
|
Net income
(loss)
|
(4.9)
|
|
3.9
|
|
N.M.
|
|
3.6
|
|
3.8
|
|
-5.3%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
N.M. - Not
meaningful.
|
(A)
|
|
|
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.
|
|
|
|
|
- 4 -
|
HORACE MANN
EDUCATORS CORPORATION
|
Supplemental Business
Segment Overview (Unaudited)
|
(Dollars in
Millions)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months
Ended
|
|
|
|
Nine Months
Ended
|
|
|
|
|
|
|
September
30,
|
|
|
|
September
30,
|
|
|
|
|
|
|
2013
|
|
2012
|
|
% Change
|
|
2013
|
|
2012
|
|
% Change
|
INVESTMENTS
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Annuity and
Life
|
|
|
|
|
|
|
|
|
|
|
|
|
Fixed maturities, at
fair value (amortized
|
|
|
|
|
|
|
|
|
|
|
|
|
|
cost 2013,
$4,921.7; 2012, $4,365.7)
|
|
|
|
|
|
|
$ 5,190.9
|
|
$ 4,942.2
|
|
5.0%
|
|
Equity securities, at
fair value
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(cost 2013,
$34.4; 2012, $7.7)
|
|
|
|
|
|
|
31.3
|
|
7.7
|
|
N.M.
|
|
Short-term
investments
|
|
|
|
|
|
|
37.3
|
|
130.8
|
|
-71.5%
|
|
Short-term
investments, securities
|
|
|
|
|
|
|
|
|
|
|
|
|
|
lending
collateral
|
|
|
|
|
|
|
-
|
|
-
|
|
-
|
|
Policy
loans
|
|
|
|
|
|
|
139.0
|
|
133.1
|
|
4.4%
|
|
Other
investments
|
|
|
|
|
|
|
55.2
|
|
52.5
|
|
5.1%
|
|
|
|
Total Annuity and
Life investments
|
|
|
|
|
|
|
5,453.7
|
|
5,266.3
|
|
3.6%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Property &
Casualty
|
|
|
|
|
|
|
|
|
|
|
|
|
Fixed maturities, at
fair value (amortized
|
|
|
|
|
|
|
|
|
|
|
|
|
|
cost 2013,
$741.0; 2012, $770.6)
|
|
|
|
|
|
|
749.6
|
|
839.9
|
|
-10.8%
|
|
Equity securities, at
fair value
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(cost 2013,
$48.7; 2012, $29.6)
|
|
|
|
|
|
|
55.3
|
|
31.5
|
|
75.6%
|
|
Short-term
investments
|
|
|
|
|
|
|
35.9
|
|
22.9
|
|
56.8%
|
|
Short-term
investments, securities
|
|
|
|
|
|
|
|
|
|
|
|
|
|
lending
collateral
|
|
|
|
|
|
|
-
|
|
-
|
|
-
|
|
Other
investments
|
|
|
|
|
|
|
25.1
|
|
-
|
|
N.M.
|
|
|
|
Total Property &
Casualty investments
|
|
|
|
|
|
|
865.9
|
|
894.3
|
|
-3.2%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Corporate
investments
|
|
|
|
|
|
|
21.2
|
|
14.2
|
|
49.3%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
investments
|
|
|
|
|
|
|
6,340.8
|
|
6,174.8
|
|
2.7%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net investment
income
|
|
|
|
|
|
|
|
|
|
|
|
|
Before tax
|
$
78.4
|
|
$
76.7
|
|
2.2%
|
|
$
233.2
|
|
$
228.7
|
|
2.0%
|
|
After tax
|
52.7
|
|
51.7
|
|
1.9%
|
|
156.9
|
|
154.1
|
|
1.8%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net realized
investment gains (losses)
|
|
|
|
|
|
|
|
|
|
|
|
|
Before tax
|
$
(1.4)
|
|
$
10.8
|
|
N.M.
|
|
$
20.9
|
|
$
21.1
|
|
-0.9%
|
|
After tax
|
(0.9)
|
|
6.9
|
|
N.M.
|
|
13.5
|
|
13.6
|
|
-0.7%
|
|
|
Per share,
diluted
|
$ (0.02)
|
|
$
0.16
|
|
N.M.
|
|
$
0.32
|
|
$
0.32
|
|
-
|
N.M. - Not
meaningful.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
- 5 -
|
SOURCE Horace Mann Educators Corporation