SPRINGFIELD, Ill., July 23, 2014 /PRNewswire/ -- Horace Mann
Educators Corporation (NYSE:HMN) today reported financial results
for the three and six months ended June 30,
2014:
Horace Mann Financial
Highlights
|
|
Three months
ended
June 30,
|
|
Six months
ended
June 30,
|
($ in millions,
except per share amounts)
|
2014
|
2013
|
Change
|
|
2014
|
2013
|
Change
|
Total
revenues
|
$264.8
|
$265.6
|
-0.3%
|
|
$526.0
|
$520.2
|
1.1%
|
Net income
|
20.4
|
26.0
|
-21.5%
|
|
48.8
|
53.0
|
-7.9%
|
Net income per
diluted share
|
0.48
|
0.63
|
-23.8%
|
|
1.16
|
1.29
|
-10.1%
|
Operating
income*
|
18.2
|
16.0
|
13.8%
|
|
45.5
|
38.6
|
17.9%
|
Operating income
per diluted
share*
|
0.43
|
0.39
|
10.3%
|
|
1.08
|
0.94
|
14.9%
|
Book value per
share
|
|
|
|
|
31.40
|
27.72
|
13.3%
|
Book value per share
excluding the fair
value adjustment
for
investments*
|
|
|
|
|
24.51
|
22.79
|
7.5%
|
Property and Casualty
segment
net income
|
4.9
|
4.1
|
19.5%
|
|
18.9
|
14.3
|
32.2%
|
Property and
Casualty combined
ratio
|
102.7%
|
103.3%
|
-0.6 pts
|
|
98.2%
|
100.3%
|
-2.1 pts
|
Property and Casualty
underlying
combined
ratio*
|
88.5%
|
89.0%
|
-0.5 pts
|
|
90.3%
|
92.3%
|
-2.0 pts
|
Annuity segment net
income
|
$ 11.5
|
$ 9.2
|
25.0%
|
|
$ 23.8
|
$ 20.3
|
17.2%
|
Life segment net
income
|
5.0
|
5.6
|
-10.7%
|
|
8.9
|
9.9
|
-10.1%
|
|
* 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 second quarter
operating income was $0.43 per
diluted share, led by strong annuity results, as well as solid
earnings in our life and property and casualty segments," said
Horace Mann's President and CEO
Marita Zuraitis. "In our
annuity segment, assets under management increased 11% over the 12
months, and the interest spread was better than expected. For
the life segment, net income decreased primarily due to a more
normal level of mortality losses. The property and casualty
combined ratio of 102.7% reflected the impact of 16.3 points of
catastrophe losses driven by May and June hail storms.
Annuity sales were strong, up 34%, led by a successful full quarter
of fixed indexed annuity sales. Life sales increased
significantly, reflecting growth in both single premium and
recurring premium products, and property and casualty sales
increased 2%."
Property and Casualty Segment
The property and casualty segment recorded net income of
$4.9 million for the current quarter
compared to $4.1 million for the same
period in 2013. The total property and casualty combined
ratio of 102.7% was 0.6 percentage point lower than the second
quarter of 2013. The underlying property and casualty
combined ratio of 88.5% improved 0.5 percentage point compared to
the prior year quarter. The improvement primarily reflected a
decrease in the expense ratio, accompanied by improvement in the
underlying auto loss ratio offset by an increase in the property
underlying loss ratio.
Pretax catastrophe losses in the current quarter of $23.5 million, or 16.3 points, increased
$1.0 million, or 0.2 points, compared
to a year ago. Favorable prior years' reserve development of
$3.0 million, or 2.1 points, was
recorded in the second quarter, compared to $2.6 million, or 1.8 points, of favorable
development recorded in the prior year.
For the six months, property and casualty net income of
$18.9 million increased $4.6 million compared to the same period in
2013. The year-to-date combined ratio and underlying combined
ratio of 98.2% and 90.3%, respectively, improved 2.1 percentage
points and 2.0 percentage points compared to the first half of
2013, primarily reflecting improvement in the underlying auto loss
ratio. The current expense ratio was consistent with last
year's six month result.
Total property and casualty written premiums of $148.2 million and $285.4
million each increased 3% compared to the three and six
months ended June 30, 2013. The
growth was driven by increases in average premium per policy for
both auto and property accompanied by reductions in catastrophe
reinsurance costs.
Horace Mann's auto sales
increased 4% and 1% compared to the three and six months ended
June 30, 2013, respectively.
Declines in property new business of 9% for the quarter and 11% for
the six months were largely due to continued risk mitigation
initiatives. On a combined basis, property and casualty sales
increased 2% compared to the second quarter of 2013 and decreased
1% compared to the first half of 2013. Policy retention
continues to be strong with the auto and property policy retention
rates for the current period at 85% and 89%, respectively.
Annuity Segment
Annuity segment net income of $11.5
million and $23.8 million for
the three and six months ended June 30,
2014 increased $2.3 million
and $3.5 million, respectively,
compared to the same periods in 2013. For the first half of
2014, the annualized net interest spread of 205 basis points on
fixed annuity assets reflected continued solid investment portfolio
performance and elevated security prepayment activity from the
first quarter of 2014. The favorable net interest spread,
accompanied by the increase in fixed annuity assets under
management, resulted in the net interest margin increasing 11%
compared to the first half of 2013. The deferred policy
acquisition costs unlocking in the current quarter had a
$0.4 million pretax positive impact
on annuity segment net income compared to a $1.0 million pretax negative impact in the prior
year second quarter; for the six months, the positive impacts were
minimal in both years. Total annuity assets under management
of $5.5 billion increased 11%
compared to June 30, 2013, and total
cash value persistency remained strong at approximately 95%.
For the three and six months ended June
30, 2014, annuity deposits of $118.0
million and $218.3 million
increased 20% and 16%, respectively, compared to the prior year
periods, primarily due to an increase in the amount of single
premium and rollover deposits received in the current
periods. For both periods, recurring deposit receipts also
exceeded the prior year amounts.
Annuity sales by the company's agency force increased 41% and
32% compared to the three and six months ended June 30, 2013, respectively, while annuity sales
from the independent agent distribution channel decreased 10% and
2% compared to the same periods. As a result, Horace Mann's total annuity sales for the
current quarter and six months increased 34% and 27%, respectively,
led by sales of the company's new fixed indexed annuity
product.
Life Segment
Life segment net income of $5.0
million for the second quarter and $8.9 million for the first half of the year
decreased $0.6 million and
$1.0 million compared to the
respective periods in 2013. In the current year, mortality
losses were a more normal level, partially offset by an increase in
investment income.
In 2014, life segment insurance premiums and contract deposits
of $26.2 million for the current
quarter and $49.0 million for the six
months increased 4% and 2% compared to the respective periods a
year earlier. Life persistency of 96% was comparable to 12
months earlier. For the first six months, Horace Mann life sales of $5.0 million increased 43% compared to the prior
year due to growth in the second quarter.
Investment Results
Total net investment income increased 5% and 6% compared to the
three and six months ended June 30,
2013, respectively, reflecting higher asset balances in the
annuity segment, as well as continued strong performance in the
fixed maturity and alternative investment portfolios. Pretax
net realized investment gains were $3.5
million and $5.2 million in
the current quarter and six months, respectively.
Horace Mann's net unrealized
investment gains on fixed maturity and equity securities of
$501.2 million at June 30, 2014 increased 33% compared to the
$376.2 million net unrealized gain at
March 31, 2014, primarily due to the
decline in interest rates during the current quarter. Net
unrealized gains were $232.5 million
at December 31, 2013 and $344.5 million at June 30,
2013.
Webcast Conference Call
Horace Mann's senior management
will discuss the company's second quarter financial results with
investors and analysts on July 24,
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 March 31, 2014 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
|
|
|
|
Six Months
Ended
|
|
|
|
|
|
|
June 30,
|
|
|
|
June 30,
|
|
|
|
|
|
|
2014
|
|
2013
|
|
% Change
|
|
2014
|
|
2013
|
|
% Change
|
EARNINGS
SUMMARY
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income
|
$ 20.4
|
|
$ 26.0
|
|
-21.5%
|
|
$ 48.8
|
|
$ 53.0
|
|
-7.9%
|
|
Net realized
investment gains, after tax
|
2.2
|
|
10.0
|
|
-78.0%
|
|
3.3
|
|
14.4
|
|
-77.1%
|
Operating income
(A)
|
18.2
|
|
16.0
|
|
13.8%
|
|
45.5
|
|
38.6
|
|
17.9%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Per diluted
share:
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income
|
$ 0.48
|
|
$ 0.63
|
|
-23.8%
|
|
$ 1.16
|
|
$ 1.29
|
|
-10.1%
|
|
|
Net realized
investment gains, after tax
|
$ 0.05
|
|
$ 0.24
|
|
-79.2%
|
|
$ 0.08
|
|
$ 0.35
|
|
-77.1%
|
|
Operating income
(A)
|
$ 0.43
|
|
$ 0.39
|
|
10.3%
|
|
$ 1.08
|
|
$ 0.94
|
|
14.9%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average
number of shares
|
|
|
|
|
|
|
|
|
|
|
|
|
and equivalent shares
(in millions) - Diluted
|
42.3
|
|
41.4
|
|
2.2%
|
|
42.2
|
|
41.2
|
|
2.4%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
RETURN ON
EQUITY
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income return on
equity (B)
|
|
|
|
|
|
|
9.2%
|
|
9.8%
|
|
N.M.
|
Operating income
return on equity excluding the fair value
|
|
|
|
|
|
|
|
|
|
|
|
|
adjustment for
investments (A) (C)
|
|
|
|
|
|
|
10.8%
|
|
10.7%
|
|
N.M.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
FINANCIAL
POSITION
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Per share
(D):
|
|
|
|
|
|
|
|
|
|
|
|
|
Book value
|
|
|
|
|
|
|
$ 31.40
|
|
$ 27.72
|
|
13.3%
|
|
|
Effect of the fair
value adjustment for investments (E)
|
|
|
|
|
|
|
$ 6.89
|
|
$ 4.93
|
|
39.8%
|
|
Book value excluding
the fair value adjustment for investments (A)
|
|
|
|
|
|
|
$ 24.51
|
|
$ 22.79
|
|
7.5%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Dividends
paid
|
$ 0.23
|
|
$ 0.195
|
|
17.9%
|
|
$ 0.46
|
|
$ 0.39
|
|
17.9%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Ending number of
shares outstanding (in millions) (D)
|
|
|
|
|
|
|
40.9
|
|
39.9
|
|
2.5%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
assets
|
|
|
|
|
|
|
$ 9,446.2
|
|
$ 8,355.8
|
|
13.0%
|
Short-term
debt
|
|
|
|
|
|
|
38.0
|
|
38.0
|
|
-
|
Long-term
debt
|
|
|
|
|
|
|
199.9
|
|
199.8
|
|
0.1%
|
Total shareholders'
equity
|
|
|
|
|
|
|
1,283.1
|
|
1,106.3
|
|
16.0%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
ADDITIONAL
INFORMATION
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Exclusive agencies
(F)
|
|
|
|
|
|
|
620
|
|
615
|
|
0.8%
|
Employee agents
(G)
|
|
|
|
|
|
|
87
|
|
121
|
|
-28.1%
|
|
Total
|
|
|
|
|
|
|
|
707
|
|
736
|
|
-3.9%
|
|
|
|
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 40,859,718 at June 30, 2014 and 39,911,504 at June
30, 2013.
|
(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
|
|
|
|
Six Months
Ended
|
|
|
|
|
|
|
June 30,
|
|
|
|
June 30,
|
|
|
|
|
|
|
2014
|
|
2013
|
|
% Change
|
|
2014
|
|
2013
|
|
% Change
|
STATEMENTS OF
OPERATIONS
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Insurance premiums
and contract charges earned
|
$ 179.1
|
|
$ 171.5
|
|
4.4%
|
|
$ 354.5
|
|
$ 340.7
|
|
4.1%
|
Net investment
income
|
81.4
|
|
77.4
|
|
5.2%
|
|
164.4
|
|
154.8
|
|
6.2%
|
Net realized
investment gains
|
3.5
|
|
15.4
|
|
-77.3%
|
|
5.2
|
|
22.3
|
|
-76.7%
|
Other
income
|
0.8
|
|
1.3
|
|
-38.5%
|
|
1.9
|
|
2.4
|
|
-20.8%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
revenues
|
264.8
|
|
265.6
|
|
-0.3%
|
|
526.0
|
|
520.2
|
|
1.1%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Benefits, claims and
settlement expenses
|
127.2
|
|
120.8
|
|
5.3%
|
|
239.2
|
|
233.5
|
|
2.4%
|
Interest
credited
|
43.7
|
|
42.1
|
|
3.8%
|
|
86.8
|
|
83.5
|
|
4.0%
|
Policy acquisition
expenses amortized
|
22.5
|
|
23.0
|
|
-2.2%
|
|
45.5
|
|
43.1
|
|
5.6%
|
Operating
expenses
|
39.3
|
|
39.0
|
|
0.8%
|
|
79.2
|
|
77.8
|
|
1.8%
|
Interest
expense
|
3.6
|
|
3.5
|
|
2.9%
|
|
7.1
|
|
7.1
|
|
-
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total benefits,
losses and expenses
|
236.3
|
|
228.4
|
|
3.5%
|
|
457.8
|
|
445.0
|
|
2.9%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income before income
taxes
|
28.5
|
|
37.2
|
|
-23.4%
|
|
68.2
|
|
75.2
|
|
-9.3%
|
|
Income tax
expense
|
8.1
|
|
11.2
|
|
-27.7%
|
|
19.4
|
|
22.2
|
|
-12.6%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income
|
$ 20.4
|
|
$ 26.0
|
|
-21.5%
|
|
$ 48.8
|
|
$ 53.0
|
|
-7.9%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
PREMIUMS WRITTEN
AND CONTRACT DEPOSITS
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Property &
Casualty
|
$ 148.2
|
|
$ 144.2
|
|
2.8%
|
|
$ 285.4
|
|
$ 276.1
|
|
3.4%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Annuity
deposits
|
118.0
|
|
98.4
|
|
19.9%
|
|
218.3
|
|
188.6
|
|
15.7%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Life
|
|
|
26.2
|
|
25.1
|
|
4.4%
|
|
49.0
|
|
48.1
|
|
1.9%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
$ 292.4
|
|
$ 267.7
|
|
9.2%
|
|
$ 552.7
|
|
$ 512.8
|
|
7.8%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
SEGMENT NET INCOME
(LOSS)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Property &
Casualty
|
$ 4.9
|
|
$ 4.1
|
|
19.5%
|
|
$ 18.9
|
|
$ 14.3
|
|
32.2%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Annuity
|
|
11.5
|
|
9.2
|
|
25.0%
|
|
23.8
|
|
20.3
|
|
17.2%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Life
|
|
|
5.0
|
|
5.6
|
|
-10.7%
|
|
8.9
|
|
9.9
|
|
-10.1%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Corporate and other
(A)
|
(1.0)
|
|
7.1
|
|
N.M.
|
|
(2.8)
|
|
8.5
|
|
N.M.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income
|
$ 20.4
|
|
$ 26.0
|
|
-21.5%
|
|
$ 48.8
|
|
$ 53.0
|
|
-7.9%
|
|
|
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
|
|
|
|
Six Months
Ended
|
|
|
|
|
|
|
June 30,
|
|
|
|
June 30,
|
|
|
|
|
|
|
2014
|
|
2013
|
|
% Change
|
|
2014
|
|
2013
|
|
% Change
|
PROPERTY &
CASUALTY
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Premiums
written
|
$ 148.2
|
|
$ 144.2
|
|
2.8%
|
|
$ 285.4
|
|
$ 276.1
|
|
3.4%
|
Premiums
earned
|
144.6
|
|
139.5
|
|
3.7%
|
|
288.5
|
|
277.4
|
|
4.0%
|
Net investment
income
|
9.4
|
|
9.1
|
|
3.3%
|
|
18.7
|
|
18.1
|
|
3.3%
|
Other
income
|
-
|
|
-
|
|
-
|
|
0.2
|
|
-
|
|
N.M.
|
Losses and loss
adjustment expenses (LAE)
|
109.9
|
|
106.1
|
|
3.6%
|
|
204.9
|
|
202.5
|
|
1.2%
|
Operating expenses
(includes policy
|
|
|
|
|
|
|
|
|
|
|
|
|
acquisition expenses
amortized)
|
38.5
|
|
38.0
|
|
1.3%
|
|
78.3
|
|
75.7
|
|
3.4%
|
Income before
tax
|
5.6
|
|
4.5
|
|
24.4%
|
|
24.2
|
|
17.3
|
|
39.9%
|
Net income
|
4.9
|
|
4.1
|
|
19.5%
|
|
18.9
|
|
14.3
|
|
32.2%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net investment
income, after tax
|
7.9
|
|
7.7
|
|
2.6%
|
|
15.7
|
|
15.3
|
|
2.6%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Catastrophe costs
(A)
|
|
|
|
|
|
|
|
|
|
|
|
|
After tax
|
15.3
|
|
14.6
|
|
4.8%
|
|
19.4
|
|
18.3
|
|
6.0%
|
|
Before tax
|
23.5
|
|
22.5
|
|
4.4%
|
|
29.8
|
|
28.2
|
|
5.7%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Prior years' reserves
favorable (adverse)
|
|
|
|
|
|
|
|
|
|
|
|
|
development, before
tax
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Automobile
|
3.0
|
|
2.6
|
|
15.4%
|
|
7.0
|
|
5.9
|
|
18.6%
|
|
|
Property
|
-
|
|
-
|
|
-
|
|
-
|
|
-
|
|
-
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
3.0
|
|
2.6
|
|
15.4%
|
|
7.0
|
|
5.9
|
|
18.6%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating
statistics:
|
|
|
|
|
|
|
|
|
|
|
|
|
Loss and loss
adjustment expense ratio
|
76.0%
|
|
76.1%
|
|
N.M.
|
|
71.0%
|
|
73.0%
|
|
N.M.
|
|
Expense
ratio
|
26.7%
|
|
27.2%
|
|
N.M.
|
|
27.2%
|
|
27.3%
|
|
N.M.
|
|
Combined
ratio
|
102.7%
|
|
103.3%
|
|
N.M.
|
|
98.2%
|
|
100.3%
|
|
N.M.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Effect on the
combined ratio of:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Catastrophe costs
(A)
|
16.3%
|
|
16.1%
|
|
N.M.
|
|
10.3%
|
|
10.2%
|
|
N.M.
|
|
|
|
Prior years' reserve
development
|
-2.1%
|
|
-1.8%
|
|
N.M.
|
|
-2.4%
|
|
-2.2%
|
|
N.M.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Combined ratio
excluding the effects of catastrophe
|
|
|
|
|
|
|
|
|
|
|
|
|
|
costs and prior
years' reserve development
|
|
|
|
|
|
|
|
|
|
|
|
|
|
("underlying combined
ratio") (B)
|
88.5%
|
|
89.0%
|
|
N.M.
|
|
90.3%
|
|
92.3%
|
|
N.M.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Policies in force
(voluntary) (in thousands)
|
|
|
|
|
|
|
712
|
|
724
|
|
-1.7%
|
|
Automobile
|
|
|
|
|
|
|
480
|
|
487
|
|
-1.4%
|
|
Property
|
|
|
|
|
|
|
232
|
|
237
|
|
-2.1%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Policy renewal rate
(voluntary) - 12 months
|
|
|
|
|
|
|
|
|
|
|
|
|
Automobile
|
|
|
|
|
|
|
84.5%
|
|
85.1%
|
|
N.M.
|
|
Property
|
|
|
|
|
|
|
88.8%
|
|
89.5%
|
|
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
|
|
|
|
Six Months
Ended
|
|
|
|
|
|
|
June 30,
|
|
|
|
June 30,
|
|
|
|
|
|
|
2014
|
|
2013
|
|
% Change
|
|
2014
|
|
2013
|
|
% Change
|
ANNUITY
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Contract
deposits
|
$ 118.0
|
|
$ 98.4
|
|
19.9%
|
|
$ 218.3
|
|
$ 188.6
|
|
15.7%
|
|
Variable
|
35.2
|
|
35.3
|
|
-0.3%
|
|
67.7
|
|
65.6
|
|
3.2%
|
|
Fixed
|
82.8
|
|
63.1
|
|
31.2%
|
|
150.6
|
|
123.0
|
|
22.4%
|
Contract charges
earned
|
6.5
|
|
5.7
|
|
14.0%
|
|
12.4
|
|
10.8
|
|
14.8%
|
Net investment
income
|
54.4
|
|
51.4
|
|
5.8%
|
|
110.2
|
|
102.7
|
|
7.3%
|
Interest
credited
|
32.8
|
|
31.4
|
|
4.5%
|
|
65.1
|
|
62.1
|
|
4.8%
|
|
Net interest margin
(without realized investment gains/losses)
|
21.6
|
|
20.0
|
|
8.0%
|
|
45.1
|
|
40.6
|
|
11.1%
|
Other
income
|
0.5
|
|
1.0
|
|
-50.0%
|
|
1.1
|
|
1.7
|
|
-35.3%
|
Mortality loss and
other reserve changes
|
(0.4)
|
|
(0.7)
|
|
-42.9%
|
|
(0.8)
|
|
(1.0)
|
|
-20.0%
|
Operating expenses
(includes policy
|
|
|
|
|
|
|
|
|
|
|
|
|
acquisition expenses
amortized)
|
11.4
|
|
12.4
|
|
-8.1%
|
|
23.2
|
|
22.0
|
|
5.5%
|
Income before
tax
|
16.8
|
|
13.6
|
|
23.5%
|
|
34.6
|
|
30.1
|
|
15.0%
|
Net income
|
11.5
|
|
9.2
|
|
25.0%
|
|
23.8
|
|
20.3
|
|
17.2%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Pretax income
increase (decrease) due to
|
|
|
|
|
|
|
|
|
|
|
|
|
evaluation
of:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Deferred policy
acquisition costs
|
$ 0.4
|
|
$ (1.0)
|
|
N.M.
|
|
$ 0.3
|
|
$ 0.6
|
|
-50.0%
|
|
|
Guaranteed minimum
death benefit reserve
|
-
|
|
-
|
|
-
|
|
-
|
|
0.1
|
|
-100.0%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Annuity contracts in
force (in thousands)
|
|
|
|
|
|
|
197
|
|
191
|
|
3.1%
|
Accumulated account
value on deposit / Assets under management
|
|
|
|
|
|
|
$ 5,544.7
|
|
$ 4,997.2
|
|
11.0%
|
|
Variable
|
|
|
|
|
|
|
1,814.1
|
|
1,525.5
|
|
18.9%
|
|
Fixed
|
|
|
|
|
|
|
3,730.6
|
|
3,471.7
|
|
7.5%
|
Annuity accumulated
value retention - 12 months
|
|
|
|
|
|
|
|
|
|
|
|
|
Variable
accumulations
|
|
|
|
|
|
|
94.1%
|
|
94.1%
|
|
N.M.
|
|
Fixed
accumulations
|
|
|
|
|
|
|
94.9%
|
|
95.4%
|
|
N.M.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
LIFE
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Premiums and contract
deposits
|
$ 26.2
|
|
$ 25.1
|
|
4.4%
|
|
$ 49.0
|
|
$ 48.1
|
|
1.9%
|
Premiums and contract
charges earned
|
28.0
|
|
26.3
|
|
6.5%
|
|
53.6
|
|
52.5
|
|
2.1%
|
Net investment
income
|
17.9
|
|
17.2
|
|
4.1%
|
|
36.0
|
|
34.5
|
|
4.3%
|
Other
income
|
0.3
|
|
0.3
|
|
-
|
|
0.6
|
|
0.7
|
|
-14.3%
|
Death
benefits/mortality cost/change in reserves
|
16.9
|
|
14.0
|
|
20.7%
|
|
33.5
|
|
30.0
|
|
11.7%
|
Interest
credited
|
10.9
|
|
10.7
|
|
1.9%
|
|
21.7
|
|
21.4
|
|
1.4%
|
Operating expenses
(includes policy
|
|
|
|
|
|
|
|
|
|
|
|
|
acquisition expenses
amortized)
|
10.7
|
|
10.5
|
|
1.9%
|
|
21.3
|
|
20.9
|
|
1.9%
|
Income before
tax
|
7.7
|
|
8.6
|
|
-10.5%
|
|
13.7
|
|
15.4
|
|
-11.0%
|
Net income
|
5.0
|
|
5.6
|
|
-10.7%
|
|
8.9
|
|
9.9
|
|
-10.1%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Pretax income
increase (decrease) due to
|
|
|
|
|
|
|
|
|
|
|
|
|
evaluation
of:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Deferred policy
acquisition costs
|
$ 0.1
|
|
$ (0.1)
|
|
N.M.
|
|
$ 0.1
|
|
$ (0.1)
|
|
N.M.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Life policies in
force (in thousands)
|
|
|
|
|
|
|
200
|
|
200
|
|
-
|
Life insurance in
force
|
|
|
|
|
|
|
$ 15,414
|
|
$ 14,837
|
|
3.9%
|
Lapse ratio - 12
months
|
|
|
|
|
|
|
|
|
|
|
|
|
(Ordinary life
insurance)
|
|
|
|
|
|
|
4.1%
|
|
4.4%
|
|
N.M.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
CORPORATE AND
OTHER (A)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Components of income
(loss) before tax:
|
|
|
|
|
|
|
|
|
|
|
|
|
Net realized
investment gains
|
$ 3.5
|
|
$ 15.4
|
|
-77.3%
|
|
$ 5.2
|
|
$ 22.3
|
|
-76.7%
|
|
Interest
expense
|
(3.6)
|
|
(3.5)
|
|
2.9%
|
|
(7.1)
|
|
(7.1)
|
|
-
|
|
Other operating
expenses, net investment income
|
|
|
|
|
|
|
|
|
|
|
|
|
|
and other
income
|
(1.5)
|
|
(1.4)
|
|
7.1%
|
|
(2.4)
|
|
(2.8)
|
|
-14.3%
|
Income (loss) before
tax
|
(1.6)
|
|
10.5
|
|
N.M.
|
|
(4.3)
|
|
12.4
|
|
N.M.
|
Net income
(loss)
|
(1.0)
|
|
7.1
|
|
N.M.
|
|
(2.8)
|
|
8.5
|
|
N.M.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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
|
|
|
|
Six Months
Ended
|
|
|
|
|
|
|
June 30,
|
|
|
|
June 30,
|
|
|
|
|
|
|
2014
|
|
2013
|
|
% Change
|
|
2014
|
|
2013
|
|
% Change
|
INVESTMENTS
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Annuity and
Life
|
|
|
|
|
|
|
|
|
|
|
|
|
Fixed maturities, at
fair value (amortized
|
|
|
|
|
|
|
|
|
|
|
|
|
|
cost 2014,
$5,412.4; 2013, $4,815.9)
|
|
|
|
|
|
|
$ 5,858.0
|
|
$ 5,136.6
|
|
14.0%
|
|
Equity securities, at
fair value
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(cost 2014,
$40.5; 2013, $30.4)
|
|
|
|
|
|
|
40.3
|
|
29.4
|
|
37.1%
|
|
Short-term
investments
|
|
|
|
|
|
|
7.8
|
|
49.1
|
|
-84.1%
|
|
Policy
loans
|
|
|
|
|
|
|
142.2
|
|
136.7
|
|
4.0%
|
|
Other
investments
|
|
|
|
|
|
|
62.0
|
|
54.9
|
|
12.9%
|
|
|
|
Total Annuity and
Life investments
|
|
|
|
|
|
|
6,110.3
|
|
5,406.7
|
|
13.0%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Property &
Casualty
|
|
|
|
|
|
|
|
|
|
|
|
|
Fixed maturities, at
fair value (amortized
|
|
|
|
|
|
|
|
|
|
|
|
|
|
cost 2014,
$775.0; 2013, $775.2)
|
|
|
|
|
|
|
818.3
|
|
794.0
|
|
3.1%
|
|
Equity securities, at
fair value
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(cost 2014,
$56.7; 2013, $47.6)
|
|
|
|
|
|
|
69.2
|
|
53.6
|
|
29.1%
|
|
Short-term
investments
|
|
|
|
|
|
|
21.3
|
|
7.4
|
|
187.8%
|
|
Other
investments
|
|
|
|
|
|
|
31.2
|
|
10.0
|
|
212.0%
|
|
|
|
Total Property &
Casualty investments
|
|
|
|
|
|
|
940.0
|
|
865.0
|
|
8.7%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Corporate
investments
|
|
|
|
|
|
|
39.4
|
|
25.6
|
|
53.9%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
investments
|
|
|
|
|
|
|
7,089.7
|
|
6,297.3
|
|
12.6%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net investment
income
|
|
|
|
|
|
|
|
|
|
|
|
|
Before tax
|
$ 81.4
|
|
$ 77.4
|
|
5.2%
|
|
$ 164.4
|
|
$ 154.8
|
|
6.2%
|
|
After tax
|
54.7
|
|
52.1
|
|
5.0%
|
|
110.4
|
|
104.2
|
|
6.0%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net realized
investment gains
|
|
|
|
|
|
|
|
|
|
|
|
|
Before tax
|
$ 3.5
|
|
$ 15.4
|
|
-77.3%
|
|
$ 5.2
|
|
$ 22.3
|
|
-76.7%
|
|
After tax
|
2.2
|
|
10.0
|
|
-78.0%
|
|
3.3
|
|
14.4
|
|
-77.1%
|
|
|
Per share,
diluted
|
$ 0.05
|
|
$ 0.24
|
|
-79.2%
|
|
$ 0.08
|
|
$ 0.35
|
|
-77.1%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
N.M. - Not
meaningful.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
-5-
|
SOURCE Horace Mann Educators Corporation