SPRINGFIELD, Ill., Feb. 4, 2014 /PRNewswire/ -- Horace Mann
Educators Corporation (NYSE:HMN) today reported financial results
for the three and twelve months ended December 31, 2013:
Horace Mann Financial
Highlights
|
|
Three months
ended
December
31,
|
|
Twelve months
ended
December
31,
|
($ in millions,
except per share
amounts)
|
2013
|
2012
|
Change
|
|
2013
|
2012
|
Change
|
Total
revenues
|
$259.1
|
$255.4
|
1.4%
|
|
$1,031.2
|
$1,010.8
|
2.0%
|
Net income
|
34.3
|
31.9
|
7.5%
|
|
110.9
|
103.9
|
6.7%
|
Net income per
diluted share
|
0.81
|
0.77
|
5.2%
|
|
2.66
|
2.51
|
6.0%
|
Operating
income*
|
33.4
|
27.9
|
19.7%
|
|
96.5
|
86.3
|
11.8%
|
Operating income
per
diluted
share*
|
0.79
|
0.67
|
17.9%
|
|
2.32
|
2.08
|
11.5%
|
Book value per
share
|
|
|
|
|
27.14
|
31.65
|
-14.2%
|
Book value per share
excluding
the fair value
adjustment
for
investments*
|
|
|
|
|
23.83
|
21.93
|
8.7%
|
Property and Casualty
segment
net income
|
19.0
|
14.5
|
31.0%
|
|
44.4
|
37.1
|
19.7%
|
Property and
Casualty
combined
ratio
|
87.4%
|
92.4%
|
-5.0 pts
|
|
96.3%
|
98.3%
|
-2.0 pts
|
Property and Casualty
underlying
combined
ratio*
|
91.0%
|
94.5%
|
-3.5 pts
|
|
92.4%
|
93.5%
|
-1.1 pts
|
Annuity segment net
income
|
$ 12.8
|
$
11.1
|
15.3%
|
|
$
44.7
|
$
40.5
|
10.4%
|
Life segment net
income
|
4.7
|
5.7
|
-17.5%
|
|
20.4
|
21.9
|
-6.8%
|
|
* 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.
|
|
"Horace Mann's fourth quarter
operating income was $0.79 per
diluted share, led by strong property and casualty results, as well
as solid earnings in our annuity and life segments. For the
full year, operating income was $2.32
per diluted share -- a company record -- reflecting strong
performance across all three segments of our multiline insurance
platform," stated Horace Mann's
President and CEO Marita
Zuraitis. "Compared to full year 2012, property and
casualty earned premiums increased 3% and the combined ratio of
96.3% improved 2 points, leading to improvement in the underlying
underwriting margin. In our annuity segment, assets under
management increased 13% over prior year, and the interest spread
finished the year better than expected, at 2%. For the life
segment, earnings exceeded our expectations as a result of lower
mortality losses. While somewhat moderated in the fourth
quarter, overall full year sales of Horace
Mann products increased compared to 2012."
"We are projecting full-year 2014 operating income of between
$2.05 and $2.25 per diluted share,"
said Zuraitis. "This estimate anticipates continued
improvement in our underlying property and casualty combined
ratio. While we expect continued favorable prior years'
reserve development, we anticipate it will be lower in 2014 than
what we experienced in 2013. In addition, we expect a return
to more normal levels of annuity deferred policy acquisition cost
unlocking and life mortality."
Property and Casualty Segment
The property and casualty segment recorded net income of
$19.0 million for the current quarter
compared to $14.5 million for the
same period in 2012. The total property and casualty combined
ratio of 87.4% was 5.0 percentage points lower than the fourth
quarter of 2012. The underlying property and casualty
combined ratio of 91.0% decreased 3.5 percentage points compared to
the prior year quarter, primarily reflecting improvements in
current accident year auto and property loss ratios. Pretax
catastrophe losses in the current quarter of $2.9 million, or 2.1 points, were comparable to a
year ago. Favorable prior years' reserve development of
$8.1 million, or 5.7 points, was
recorded in the fourth quarter, compared to $5.7 million, or 4.1 points, of favorable
development recorded in the fourth quarter of 2012.
For the year, property and casualty net income of $44.4 million increased 20% compared to 2012,
primarily due to a 2.7 point improvement in the loss ratio.
The full year combined ratio and underlying combined ratio of 96.3%
and 92.4%, respectively, improved 2.0 percentage points and 1.1
percentage points compared to 2012. This combined ratio
improvement reflected a decrease in the underlying loss ratio,
partially offset by an anticipated, modest increase in the expense
ratio.
Total property and casualty written premiums of $141.8 million and $570.4
million increased 3% and 4% compared to the three and twelve
months ended December 31, 2012,
respectively, driven by increases in average premium per policy for
both auto and property.
Horace Mann's property and
casualty sales decreased slightly compared to the fourth quarter of
2012 and increased 5% compared to full year 2012. Both auto
and property new business increased for the full year. Policy
retention continues to be strong with the auto policy retention
rate for the current period at 85% and the property policy
retention rate at 89%, both comparable to a year ago.
Annuity Segment
Annuity segment net income of $12.8
million and $44.7 million for
the three and twelve months ended December
31, 2013, respectively, increased $1.7 million and $4.2
million compared to the same periods in 2012. The full
year net interest spread of 199 basis points on fixed annuity
assets was slightly better than the first nine months of 2013, but
decreased 12 basis points compared to the prior year. This
full year net interest spread compression was more than offset by
the increase in fixed annuity assets under management, with the
resulting net interest margin increasing 3% compared to 2012.
The deferred policy acquisition costs unlocking in the current
quarter had a $1.8 million pretax
positive impact on annuity segment earnings compared to a
$2.5 million pretax positive impact
in the prior year. For the full years 2013 and 2012,
unlocking had positive impacts of $3.7
million and $3.8 million,
respectively. Total annuity accumulated account value of
$5.4 billion increased 13% compared
to December 31, 2012, and total cash
value persistency remained consistent with the prior period at
94.9%.
For the three and twelve months ended December 31, 2013, annuity deposits of
$106.2 million and $423.0 million decreased 7% and increased 1%,
respectively, compared to the prior year periods, primarily due to
variances in the amounts of single premium and rollover deposits
received in the current periods. For both the quarter and
full year, recurring deposit receipts exceeded the prior year
amounts.
Annuity sales by Horace Mann's
agency force increased 7% compared to full year 2012, but did
decline 6% in the fourth quarter. Annuity sales from the
supplemental independent agent distribution channel declined 45%
and 32% compared to the three and twelve months ended December 31, 2012, respectively. As a
result, Horace Mann's total annuity
sales for the current quarter and year decreased 15% and 1%,
respectively, compared to the prior year periods.
Life Segment
Life segment net income of $4.7
million and $20.4 million for
the fourth quarter and full year decreased $1.0 million and $1.5
million, respectively, compared to the same periods in
2012. In 2013, mortality losses were more normalized for the
fourth quarter, yet continued to be favorable compared to expected
results for the full year.
Compared to the prior year periods, life segment insurance
premiums and contract deposits of $27.4
million for the fourth quarter decreased 1%, but increased
2% to $100.8 million on a full year
basis. Life persistency of 96% was comparable to 12 months
earlier.
Full year Horace Mann life sales
increased 33% compared to the prior year, including fourth quarter
sales that were comparable to the prior year. The full year
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 4% and 2% compared to the
three and twelve months ended December 31,
2012, respectively. Pretax net realized investment
gains were $1.3 million and
$22.2 million in the current quarter
and full year, respectively.
Horace Mann's net unrealized
investment gains on fixed maturity and equity securities of
$232.5 million at December 31, 2013 decreased 17% compared to the
$281.3 million net unrealized gain at
September 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.
Webcast Conference Call
Horace Mann's senior management
will discuss the company's fourth quarter financial results with
investors and analysts on February 5,
2014 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.
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 September 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
|
|
|
|
Year Ended
|
|
|
|
|
|
|
December
31,
|
|
|
|
December
31,
|
|
|
|
|
|
|
2013
|
|
2012
|
|
% Change
|
|
2013
|
|
2012
|
|
% Change
|
EARNINGS
SUMMARY
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income
|
$
34.3
|
|
$
31.9
|
|
7.5%
|
|
$
110.9
|
|
$
103.9
|
|
6.7%
|
|
Net realized
investment gains, after tax
|
0.9
|
|
4.0
|
|
-77.5%
|
|
14.4
|
|
17.6
|
|
-18.2%
|
Operating income
(A)
|
33.4
|
|
27.9
|
|
19.7%
|
|
96.5
|
|
86.3
|
|
11.8%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Per diluted
share:
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income
|
$
0.81
|
|
$
0.77
|
|
5.2%
|
|
$
2.66
|
|
$
2.51
|
|
6.0%
|
|
|
Net realized
investment gains, after tax
|
$
0.02
|
|
$
0.10
|
|
-80.0%
|
|
$
0.34
|
|
$
0.43
|
|
-20.9%
|
|
Operating income
(A)
|
$
0.79
|
|
$
0.67
|
|
17.9%
|
|
$
2.32
|
|
$
2.08
|
|
11.5%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average
number of shares
|
|
|
|
|
|
|
|
|
|
|
|
|
and equivalent shares
(in millions) - Diluted
|
42.2
|
|
41.3
|
|
2.2%
|
|
41.6
|
|
41.4
|
|
0.5%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
RETURN ON
EQUITY
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income return on
equity (B)
|
|
|
|
|
|
|
9.6%
|
|
9.0%
|
|
N.M.
|
Operating income
return on equity excluding the fair value
|
|
|
|
|
|
|
|
|
|
|
|
|
adjustment for
investments (A) (C)
|
|
|
|
|
|
|
10.6%
|
|
10.5%
|
|
N.M.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
FINANCIAL
POSITION
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Per share
(D):
|
|
|
|
|
|
|
|
|
|
|
|
|
Book value
|
|
|
|
|
|
|
$
27.14
|
|
$
31.65
|
|
-14.2%
|
|
|
Effect of the fair
value adjustment for investments (E)
|
|
|
|
|
|
|
$
3.31
|
|
$
9.72
|
|
-65.9%
|
|
Book value excluding
the fair value adjustment for investments (A)
|
|
|
|
|
|
|
$
23.83
|
|
$
21.93
|
|
8.7%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Dividends
paid
|
$ 0.195
|
|
$
0.16
|
|
21.9%
|
|
$
0.78
|
|
$
0.55
|
|
41.8%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Ending number of
shares outstanding (in millions) (D)
|
|
|
|
|
|
|
40.5
|
|
39.4
|
|
2.8%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
assets
|
|
|
|
|
|
|
$ 8,826.7
|
|
$ 8,167.7
|
|
8.1%
|
Short-term
debt
|
|
|
|
|
|
|
38.0
|
|
38.0
|
|
-
|
Long-term
debt
|
|
|
|
|
|
|
199.9
|
|
199.8
|
|
0.1%
|
Total shareholders'
equity
|
|
|
|
|
|
|
1,099.3
|
|
1,245.8
|
|
-11.8%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
ADDITIONAL
INFORMATION
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Exclusive agencies
(F)
|
|
|
|
|
|
|
654
|
|
624
|
|
4.8%
|
Employee agents
(G)
|
|
|
|
|
|
|
105
|
|
136
|
|
-22.8%
|
|
Total
|
|
|
|
|
|
|
|
759
|
|
760
|
|
-0.1%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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 40,511,551 at December 31, 2013 and 39,367,862 at
December 31, 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
|
|
|
|
Year Ended
|
|
|
|
|
|
|
December
31,
|
|
|
|
December
31,
|
|
|
|
|
|
|
2013
|
|
2012
|
|
% Change
|
|
2013
|
|
2012
|
|
% Change
|
STATEMENTS OF
OPERATIONS
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Insurance premiums
and contract charges earned
|
$ 176.4
|
|
$ 170.8
|
|
3.3%
|
|
$
690.9
|
|
$
670.5
|
|
3.0%
|
Net investment
income
|
80.4
|
|
77.3
|
|
4.0%
|
|
313.6
|
|
306.0
|
|
2.5%
|
Net realized
investment gains
|
1.3
|
|
6.2
|
|
-79.0%
|
|
22.2
|
|
27.3
|
|
-18.7%
|
Other
income
|
1.0
|
|
1.1
|
|
-9.1%
|
|
4.5
|
|
7.0
|
|
-35.7%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
revenues
|
259.1
|
|
255.4
|
|
1.4%
|
|
1,031.2
|
|
1,010.8
|
|
2.0%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Benefits, claims and
settlement expenses
|
102.1
|
|
103.3
|
|
-1.2%
|
|
448.3
|
|
448.2
|
|
-
|
Interest
credited
|
43.5
|
|
41.8
|
|
4.1%
|
|
169.9
|
|
163.6
|
|
3.9%
|
Policy acquisition
expenses amortized
|
20.6
|
|
19.0
|
|
8.4%
|
|
84.6
|
|
79.5
|
|
6.4%
|
Operating
expenses
|
40.9
|
|
41.6
|
|
-1.7%
|
|
160.1
|
|
156.1
|
|
2.6%
|
Interest
expense
|
3.5
|
|
3.5
|
|
-
|
|
14.2
|
|
14.2
|
|
-
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total benefits,
losses and expenses
|
210.6
|
|
209.2
|
|
0.7%
|
|
877.1
|
|
861.6
|
|
1.8%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income before income
taxes
|
48.5
|
|
46.2
|
|
5.0%
|
|
154.1
|
|
149.2
|
|
3.3%
|
|
Income tax
expense
|
14.2
|
|
14.3
|
|
-0.7%
|
|
43.2
|
|
45.3
|
|
-4.6%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income
|
$
34.3
|
|
$
31.9
|
|
7.5%
|
|
$
110.9
|
|
$
103.9
|
|
6.7%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
PREMIUMS WRITTEN
AND CONTRACT DEPOSITS
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Property &
Casualty
|
|
|
|
|
|
|
|
|
|
|
|
|
Automobile and
property (voluntary)
|
$ 140.4
|
|
$ 135.8
|
|
3.4%
|
|
$
566.7
|
|
$
547.2
|
|
3.6%
|
|
Involuntary and other
property & casualty
|
1.4
|
|
1.4
|
|
-
|
|
3.7
|
|
3.6
|
|
2.8%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Property &
Casualty
|
141.8
|
|
137.2
|
|
3.4%
|
|
570.4
|
|
550.8
|
|
3.6%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Annuity
deposits
|
106.2
|
|
114.7
|
|
-7.4%
|
|
423.0
|
|
417.6
|
|
1.3%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Life
|
|
|
27.4
|
|
27.6
|
|
-0.7%
|
|
100.8
|
|
99.3
|
|
1.5%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
$ 275.4
|
|
$ 279.5
|
|
-1.5%
|
|
$ 1,094.2
|
|
$ 1,067.7
|
|
2.5%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
SEGMENT NET INCOME
(LOSS)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Property &
Casualty
|
$
19.0
|
|
$
14.5
|
|
31.0%
|
|
$
44.4
|
|
$
37.1
|
|
19.7%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Annuity
|
|
12.8
|
|
11.1
|
|
15.3%
|
|
44.7
|
|
40.5
|
|
10.4%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Life
|
|
|
4.7
|
|
5.7
|
|
-17.5%
|
|
20.4
|
|
21.9
|
|
-6.8%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Corporate and other
(A)
|
(2.2)
|
|
0.6
|
|
N.M.
|
|
1.4
|
|
4.4
|
|
-68.2%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income
|
34.3
|
|
31.9
|
|
7.5%
|
|
110.9
|
|
103.9
|
|
6.7%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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 4.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
- 2 -
|
|
|
HORACE MANN
EDUCATORS CORPORATION
|
Supplemental Business
Segment Overview (Unaudited)
|
(Dollars in
Millions)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months
Ended
|
|
|
|
Year Ended
|
|
|
|
|
|
|
December
31,
|
|
|
|
December
31,
|
|
|
|
|
|
|
2013
|
|
2012
|
|
% Change
|
|
2013
|
|
2012
|
|
% Change
|
PROPERTY &
CASUALTY
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Premiums
written
|
$ 141.8
|
|
$ 137.2
|
|
3.4%
|
|
$
570.4
|
|
$
550.8
|
|
3.6%
|
Premiums
earned
|
143.7
|
|
138.8
|
|
3.5%
|
|
561.9
|
|
546.3
|
|
2.9%
|
Net investment
income
|
9.3
|
|
9.6
|
|
-3.1%
|
|
36.2
|
|
36.8
|
|
-1.6%
|
Other
income
|
-
|
|
-
|
|
-
|
|
0.2
|
|
1.5
|
|
-86.7%
|
Losses and loss
adjustment expenses (LAE)
|
85.5
|
|
89.1
|
|
-4.0%
|
|
385.6
|
|
389.4
|
|
-1.0%
|
Operating expenses
(includes policy
|
|
|
|
|
|
|
|
|
|
|
|
|
acquisition expenses
amortized)
|
40.0
|
|
39.1
|
|
2.3%
|
|
155.5
|
|
147.3
|
|
5.6%
|
Income before
tax
|
27.5
|
|
20.2
|
|
36.1%
|
|
57.2
|
|
47.9
|
|
19.4%
|
Net income
|
19.0
|
|
14.5
|
|
31.0%
|
|
44.4
|
|
37.1
|
|
19.7%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net investment
income, after tax
|
7.7
|
|
8.0
|
|
-3.8%
|
|
30.5
|
|
31.1
|
|
-1.9%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Catastrophe costs
(A)
|
|
|
|
|
|
|
|
|
|
|
|
|
After tax
|
1.9
|
|
1.9
|
|
-
|
|
26.1
|
|
28.2
|
|
-7.4%
|
|
Before tax
|
2.9
|
|
2.8
|
|
3.6%
|
|
40.2
|
|
43.3
|
|
-7.2%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Prior years' reserves
favorable (adverse)
|
|
|
|
|
|
|
|
|
|
|
|
|
development, before
tax
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Voluntary
automobile
|
7.5
|
|
5.3
|
|
41.5%
|
|
17.2
|
|
14.4
|
|
19.4%
|
|
|
Total
property
|
0.6
|
|
0.4
|
|
50.0%
|
|
0.8
|
|
2.8
|
|
-71.4%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
8.1
|
|
5.7
|
|
42.1%
|
|
18.0
|
|
17.2
|
|
4.7%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating
statistics:
|
|
|
|
|
|
|
|
|
|
|
|
|
Loss and loss
adjustment expense ratio
|
59.5%
|
|
64.2%
|
|
N.M.
|
|
68.6%
|
|
71.3%
|
|
N.M.
|
|
Expense
ratio
|
27.9%
|
|
28.2%
|
|
N.M.
|
|
27.7%
|
|
27.0%
|
|
N.M.
|
|
Combined
ratio
|
87.4%
|
|
92.4%
|
|
N.M.
|
|
96.3%
|
|
98.3%
|
|
N.M.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Effect on the
combined ratio of:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Catastrophe costs
(A)
|
2.1%
|
|
2.0%
|
|
N.M.
|
|
7.2%
|
|
8.0%
|
|
N.M.
|
|
|
|
Prior years' reserve
development
|
-5.7%
|
|
-4.1%
|
|
N.M.
|
|
-3.3%
|
|
-3.2%
|
|
N.M.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Combined ratio
excluding the effects of catastrophe
|
|
|
|
|
|
|
|
|
|
|
|
|
|
costs and prior
years' reserve development
|
|
|
|
|
|
|
|
|
|
|
|
|
|
("underlying combined
ratio") (B)
|
91.0%
|
|
94.5%
|
|
N.M.
|
|
92.4%
|
|
93.5%
|
|
N.M.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Policies in force
(voluntary) (in thousands)
|
|
|
|
|
|
|
717
|
|
724
|
|
-1.0%
|
|
Automobile
|
|
|
|
|
|
|
482
|
|
487
|
|
-1.0%
|
|
Property
|
|
|
|
|
|
|
235
|
|
237
|
|
-0.8%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Policy renewal rate
(voluntary) - 12 months
|
|
|
|
|
|
|
|
|
|
|
|
|
Automobile
|
|
|
|
|
|
|
84.8%
|
|
84.7%
|
|
N.M.
|
|
Property
|
|
|
|
|
|
|
89.0%
|
|
89.6%
|
|
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
|
|
|
|
Year Ended
|
|
|
|
|
|
|
December
31,
|
|
|
|
December
31,
|
|
|
|
|
|
|
2013
|
|
2012
|
|
% Change
|
|
2013
|
|
2012
|
|
% Change
|
ANNUITY
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Contract
deposits
|
$ 106.2
|
|
$ 114.7
|
|
-7.4%
|
|
$
423.0
|
|
$
417.6
|
|
1.3%
|
|
Variable
|
34.6
|
|
30.0
|
|
15.3%
|
|
131.7
|
|
113.2
|
|
16.3%
|
|
Fixed
|
71.6
|
|
84.7
|
|
-15.5%
|
|
291.3
|
|
304.4
|
|
-4.3%
|
Contract charges
earned
|
5.9
|
|
5.8
|
|
1.7%
|
|
22.6
|
|
21.8
|
|
3.7%
|
Net investment
income
|
53.6
|
|
50.8
|
|
5.5%
|
|
208.4
|
|
200.8
|
|
3.8%
|
Interest
credited
|
32.7
|
|
31.1
|
|
5.1%
|
|
127.0
|
|
121.4
|
|
4.6%
|
|
Net interest margin
(without realized investment gains/losses)
|
20.9
|
|
19.7
|
|
6.1%
|
|
81.4
|
|
79.4
|
|
2.5%
|
Other
income
|
0.7
|
|
0.3
|
|
133.3%
|
|
3.0
|
|
2.7
|
|
11.1%
|
Mortality loss and
other reserve changes
|
(0.4)
|
|
(1.0)
|
|
-60.0%
|
|
(1.8)
|
|
(3.3)
|
|
-45.5%
|
Operating expenses
(includes policy
|
|
|
|
|
|
|
|
|
|
|
|
|
acquisition expenses
amortized)
|
9.8
|
|
9.2
|
|
6.5%
|
|
42.0
|
|
41.0
|
|
2.4%
|
Income before
tax
|
17.3
|
|
15.6
|
|
10.9%
|
|
63.2
|
|
59.6
|
|
6.0%
|
Net income
|
12.8
|
|
11.1
|
|
15.3%
|
|
44.7
|
|
40.5
|
|
10.4%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Pretax income
increase (decrease) due to
|
|
|
|
|
|
|
|
|
|
|
|
|
evaluation
of:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Deferred policy
acquisition costs
|
$
1.8
|
|
$
2.5
|
|
-28.0%
|
|
$
3.7
|
|
$
3.8
|
|
-2.6%
|
|
|
Guaranteed minimum
death benefit reserve
|
0.1
|
|
-
|
|
N.M.
|
|
0.2
|
|
0.2
|
|
-
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Annuity contracts in
force (in thousands)
|
|
|
|
|
|
|
195
|
|
189
|
|
3.2%
|
Accumulated account
value on deposit / Assets under management
|
|
|
|
|
|
|
$ 5,365.2
|
|
$ 4,762.5
|
|
12.7%
|
|
Variable
|
|
|
|
|
|
|
1,748.0
|
|
1,398.3
|
|
25.0%
|
|
Fixed
|
|
|
|
|
|
|
3,617.2
|
|
3,364.2
|
|
7.5%
|
Annuity accumulated
value retention - 12 months
|
|
|
|
|
|
|
|
|
|
|
|
|
Variable
accumulations
|
|
|
|
|
|
|
94.0%
|
|
94.3%
|
|
N.M.
|
|
Fixed
accumulations
|
|
|
|
|
|
|
95.2%
|
|
95.4%
|
|
N.M.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
LIFE
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Premiums and contract
deposits
|
$
27.4
|
|
$
27.6
|
|
-0.7%
|
|
$
100.8
|
|
$
99.3
|
|
1.5%
|
Premiums and contract
charges earned
|
26.8
|
|
26.2
|
|
2.3%
|
|
106.4
|
|
102.4
|
|
3.9%
|
Net investment
income
|
17.7
|
|
17.2
|
|
2.9%
|
|
69.9
|
|
69.4
|
|
0.7%
|
Other
income
|
0.3
|
|
0.6
|
|
-50.0%
|
|
1.3
|
|
2.6
|
|
-50.0%
|
Death
benefits/mortality cost/change in reserves
|
16.2
|
|
13.2
|
|
22.7%
|
|
60.9
|
|
55.5
|
|
9.7%
|
Interest
credited
|
10.8
|
|
10.7
|
|
0.9%
|
|
42.9
|
|
42.2
|
|
1.7%
|
Operating expenses
(includes policy
|
|
|
|
|
|
|
|
|
|
|
|
|
acquisition expenses
amortized)
|
10.8
|
|
11.3
|
|
-4.4%
|
|
42.5
|
|
42.5
|
|
-
|
Income before
tax
|
7.0
|
|
8.8
|
|
-20.5%
|
|
31.3
|
|
34.2
|
|
-8.5%
|
Net income
|
4.7
|
|
5.7
|
|
-17.5%
|
|
20.4
|
|
21.9
|
|
-6.8%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Pretax income
increase (decrease) due to
|
|
|
|
|
|
|
|
|
|
|
|
|
evaluation
of:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Deferred policy
acquisition costs
|
$
-
|
|
$
(0.5)
|
|
-100.0%
|
|
$
(0.1)
|
|
$
(0.8)
|
|
-87.5%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Life policies in
force (in thousands)
|
|
|
|
|
|
|
200
|
|
202
|
|
-1.0%
|
Life insurance in
force
|
|
|
|
|
|
|
$
15,104
|
|
$
14,632
|
|
3.2%
|
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
|
$
1.3
|
|
$
6.2
|
|
-79.0%
|
|
$
22.2
|
|
$
27.3
|
|
-18.7%
|
|
Interest
expense
|
(3.5)
|
|
(3.5)
|
|
-
|
|
(14.2)
|
|
(14.2)
|
|
-
|
|
Other operating
expenses, net investment income
|
|
|
|
|
|
|
|
|
|
|
|
|
|
and other
income
|
(1.1)
|
|
(1.1)
|
|
-
|
|
(5.6)
|
|
(5.6)
|
|
-
|
Income (loss) before
tax
|
(3.3)
|
|
1.6
|
|
N.M.
|
|
2.4
|
|
7.5
|
|
-68.0%
|
Net income
(loss)
|
(2.2)
|
|
0.6
|
|
N.M.
|
|
1.4
|
|
4.4
|
|
-68.2%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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
|
|
|
|
Year Ended
|
|
|
|
|
|
|
December
31,
|
|
|
|
December
31,
|
|
|
|
|
|
|
2013
|
|
2012
|
|
% Change
|
|
2013
|
|
2012
|
|
% Change
|
INVESTMENTS
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Annuity and
Life
|
|
|
|
|
|
|
|
|
|
|
|
|
Fixed maturities, at
fair value (amortized
|
|
|
|
|
|
|
|
|
|
|
|
|
|
cost 2013,
$5,023.2; 2012, $4,543.3)
|
|
|
|
|
|
|
$ 5,243.3
|
|
$ 5,129.9
|
|
2.2%
|
|
Equity securities, at
fair value
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(cost 2013,
$35.5; 2012, $6.6)
|
|
|
|
|
|
|
32.4
|
|
6.5
|
|
N.M.
|
|
Short-term
investments
|
|
|
|
|
|
|
152.9
|
|
49.3
|
|
210.1%
|
|
Short-term
investments, securities
|
|
|
|
|
|
|
|
|
|
|
|
|
|
lending
collateral
|
|
|
|
|
|
|
-
|
|
-
|
|
-
|
|
Policy
loans
|
|
|
|
|
|
|
140.6
|
|
135.0
|
|
4.1%
|
|
Other
investments
|
|
|
|
|
|
|
59.9
|
|
53.8
|
|
11.3%
|
|
|
|
Total Annuity and
Life investments
|
|
|
|
|
|
|
5,629.1
|
|
5,374.5
|
|
4.7%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Property &
Casualty
|
|
|
|
|
|
|
|
|
|
|
|
|
Fixed maturities, at
fair value (amortized
|
|
|
|
|
|
|
|
|
|
|
|
|
|
cost 2013,
$761.0; 2012, $768.1)
|
|
|
|
|
|
|
766.3
|
|
832.3
|
|
-7.9%
|
|
Equity securities, at
fair value
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(cost 2013,
$49.3; 2012, $45.8)
|
|
|
|
|
|
|
59.5
|
|
47.0
|
|
26.6%
|
|
Short-term
investments
|
|
|
|
|
|
|
13.6
|
|
8.9
|
|
52.8%
|
|
Short-term
investments, securities
|
|
|
|
|
|
|
|
|
|
|
|
|
|
lending
collateral
|
|
|
|
|
|
|
-
|
|
-
|
|
-
|
|
Other
investments
|
|
|
|
|
|
|
30.7
|
|
-
|
|
N.M.
|
|
|
|
Total Property &
Casualty investments
|
|
|
|
|
|
|
870.1
|
|
888.2
|
|
-2.0%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Corporate
investments
|
|
|
|
|
|
|
40.3
|
|
29.4
|
|
37.1%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
investments
|
|
|
|
|
|
|
6,539.5
|
|
6,292.1
|
|
3.9%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net investment
income
|
|
|
|
|
|
|
|
|
|
|
|
|
Before tax
|
$
80.4
|
|
$
77.3
|
|
4.0%
|
|
$
313.6
|
|
$
306.0
|
|
2.5%
|
|
After tax
|
53.9
|
|
52.0
|
|
3.7%
|
|
210.8
|
|
206.1
|
|
2.3%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net realized
investment gains
|
|
|
|
|
|
|
|
|
|
|
|
|
Before tax
|
$
1.3
|
|
$
6.2
|
|
-79.0%
|
|
$
22.2
|
|
$
27.3
|
|
-18.7%
|
|
After tax
|
0.9
|
|
4.0
|
|
-77.5%
|
|
14.4
|
|
17.6
|
|
-18.2%
|
|
|
Per share,
diluted
|
$
0.02
|
|
$
0.10
|
|
-80.0%
|
|
$
0.34
|
|
$
0.43
|
|
-20.9%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
N.M. - Not
meaningful.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
- 5 -
|
SOURCE Horace Mann Educators Corporation