- Sales momentum continues, with additional contribution from
newly acquired Madison National’s suite of employer-sponsored
benefit products for K-12 school districts
- Niche education market focus and multi-year emphasis on
products, distribution and infrastructure setting stage for
education market share growth
- Property & Casualty segment earnings declined, leading to
lower net income and core earnings; steady earnings in Life &
Retirement and Supplemental & Group Benefit segments
- Property & Casualty segment year-over-year comparison
unfavorable due to pandemic-related low level of auto loss activity
in prior-year quarter; industry-sector impact of inflation on
current auto loss cost trends; and limited partnership returns
below targeted historic average in this segment
- Auto combined ratio improved 6.6 points from fourth-quarter
2021
- Higher interest rates resulted in book value per share decline
of 9% due to lower unrealized gains in the fixed-maturity
portfolio; adjusted book value per share* up 5% from a year ago
- Total net investment income up 3% over last year’s first
quarter; higher interest rates will benefit future net investment
income
- Due primarily to impact of inflation on auto loss costs,
expectation for 2022 EPS now at lower end of $3.45-$3.65 guidance
range; continue to target 10% average annual EPS growth and
sustained double-digit ROEs in 2023 and beyond
- Increasing auto rate plan to achieve high-single to low-double
digit rate increases by end of year
- Growing market share supports progress toward long-term
objective of sustainable double-digit ROE
Horace Mann Educators Corporation (NYSE:HMN) today reported
financial results for the three months ended March 31, 2022:
($ in millions, except per share
amounts)
Three Months Ended
March 31,
2022
2021
% Change
Total revenues
$
346.8
$
322.0
7.7
%
Net income
14.5
39.3
-63.1
%
Net investment losses after tax
(12.2
)
(7.1
)
N.M.
Core earnings*
26.7
46.4
-42.5
%
Adjusted core earnings*
32.0
48.5
-34.0
%
Per diluted share:
Net income
0.35
0.93
-62.4
%
Net investment losses after tax
(0.29
)
(0.17
)
N.M.
Core earnings per diluted share*
0.64
1.10
-41.8
%
Adjusted core earnings per diluted
share*
0.76
1.15
-33.9
%
Book value per share
37.14
40.83
-9.0
%
Adjusted book value per share*
36.65
34.95
4.9
%
Tangible book value per share*
30.47
30.17
1.0
%
N.M. - Not meaningful.
* These measures are not based on
accounting principles generally accepted in the United States of
America (non-GAAP). They are reconciled to the most directly
comparable GAAP measures in the Appendix to the Investor
Supplement. An explanation of these measures is contained in the
Glossary of Selected Terms included as an exhibit in the Company’s
reports filed with the Securities and Exchange Commission.
“In the first quarter of 2022, we officially welcomed about
340,000 educator households and 80 employees to Horace Mann with
the completion of our acquisition of Madison National Life
Insurance Company,” said Horace Mann President and CEO Marita
Zuraitis. “Horace Mann can now reach educators through
employer-sponsored benefits at the district level, as well as
through our direct channels and local, trusted advisors with
insurance and financial services solutions.
“In the first quarter, our Supplemental & Group Benefits
segment continued its sales momentum with Madison National meeting
management’s expectations. We continue to be optimistic about the
long-term growth potential of employer-sponsored and voluntary
offerings sold through the worksite,” Zuraitis said. “In addition,
we saw consistent growth in our Retirement offerings, with annuity
contract deposits up 6% over prior year. In fact, April was the
strongest sales month we've had for P&C products since the
beginning of the pandemic and voluntary supplemental sales were
double last April.
“While we see continued top-line sales progress that supports
our long-term outlook, first-quarter Property & Casualty
segment results were lower than a year ago, which was due to
several factors,” Zuraitis continued. “First, as expected,
frequency is nearing pre-pandemic levels. Second, in line with the
broader industry, we are seeing inflation driving higher Property
& Casualty loss costs. The impact of inflation was most evident
in March, but the effect in April appeared more similar to January
and February. As our marketing strategy emphasizes customer
cross-sell and retention, we have long focused on offering a fair
auto price over the life of a customer relationship. However, to
address accelerating inflation, the auto rate plan for 2022 now
includes rate increases in the high-single to low-double-digit
range in states representing almost 80% of our premiums. Finally,
for this segment, net investment income was impacted by a lower
return on limited partnerships.
“As we continue to leverage our education market focus, we
remain confident that we will increase our share of the education
market as we grow through all channels over the course of the next
several years,” Zuraitis said. “Due to the impact of inflation on
our nearer-term auto results as well as the potential impact of
market volatility on DAC unlocking, we now believe our 2022 core
EPS is more likely to be at the lower end of the guidance range of
$3.45-$3.65 we provided when we announced year-end 2021 results. We
continue to assume a full-year limited partnerships portfolio
contribution in line with our average historical returns and
full-year catastrophe losses in line with our 10-year average.
“Beginning in 2023, we are targeting 10% average annual EPS
growth and sustained double-digit ROEs, driven by our profitable
growth,” Zuraitis added. “We expect the stronger and more diverse
company that Horace Mann has become continues to pay more than $50
million in cash dividends each year while generating an additional
$50 million in excess capital. Going forward, we expect to continue
to prioritize growth in our capital plans. At the same time, we are
committed to our 14-year track record of annual increases in our
cash dividend and returning capital to shareholders through
repurchases. The board increased our cash dividend payout by 3% in
March to an annualized rate of $1.28.”
Operating Segment Results
Beginning with first quarter 2022, Horace Mann is reporting
financial results in three operating segments: (1) Property &
Casualty, (2) Life & Retirement, and (3) Supplemental &
Group Benefits. The retail business, consisting of the Property
& Casualty and Life & Retirement segments, provides
insurance and financial services to individual educators through
agency and direct channels. The Supplemental & Group Benefits
segment provides voluntary and employer-sponsored benefits through
school district employers. These worksite offerings help school
districts attract and retain staff. This segment includes the
results of Madison National Life Insurance Company, Inc. (Madison
National) that was acquired effective January 1, 2022.
Property & Casualty segment results reflect inflation
pressures on auto loss costs (All comparisons vs. same period
in 2021, unless noted otherwise)
The Property & Casualty insurance segment primarily markets
private passenger auto insurance and residential home insurance.
Horace Mann offers standard auto coverages, including liability,
collision and comprehensive. Property coverage includes both
homeowners and renters policies. For both auto and property
coverage, Horace Mann offers educators a discounted rate and the
Educator Advantage® package of features. The Property &
Casualty segment represented 51% of 2021 total revenues and
contributed $57.0 million to 2021 core earnings.
($ in millions)
Three Months Ended
March 31,
2022
2021
Change
Property & Casualty net premiums
written*
$
139.6
$
141.8
-1.6
%
Property & Casualty net income / core
earnings*
8.5
27.9
-69.5
%
Property & Casualty combined ratio
98.4
%
86.2
%
12.2 pts
Property & Casualty underlying loss
ratio*
67.3
%
53.8
%
13.5 pts
Property & Casualty expense ratio
26.3
%
25.4
%
0.9 pts
Property & Casualty catastrophe
losses
4.8
%
7.0
%
-2.2 pts
Property & Casualty underlying
combined ratio*
93.6
%
79.2
%
14.4 pts
Auto combined ratio
101.8
%
84.2
%
17.6 pts
Auto underlying loss ratio*
75.5
%
58.8
%
16.7 pts
Property combined ratio
92.3
%
90.1
%
2.2 pts
Property underlying loss ratio*
52.3
%
44.0
%
8.3 pts
Property & Casualty segment core earnings primarily
reflected the anticipated increase in auto loss frequency toward
pre-pandemic levels and higher auto loss severity due to inflation
as well as lower net investment income due to performance of this
segment’s limited partnership portfolio. These factors more than
offset catastrophe losses below last year’s level.
Policyholder catastrophe losses were $7.3 million, which added
4.8 points to the combined ratio, from 11 events, compared to $11.0
million or 7.0 points in last year’s first quarter, from 13 events.
The auto underlying loss ratio was 75.5%, compared to 58.8% in last
year’s first quarter. Driving patterns continue their return to
historic levels and severity continues to rise, impacted by
inflation, and was unusually high in March. Property delivered a
strong underlying loss ratio of 52.3%, although higher than last
year’s first quarter.
As expected, Property & Casualty net premiums written were
slightly below last year’s first quarter as the benefit of stronger
retention is being offset by new business volumes that remain below
historical levels due to the lingering effect of the pandemic on
sales. Auto average net premiums were level with last year as
pandemic-related mileage changes have stabilized. Property average
net premiums were up over 5% as inflation adjustments to coverage
values begin to take effect.
Life & Retirement segment benefits from continued growth
in net annuity contract deposits (All comparisons vs. same
period in 2021, unless noted otherwise)
The Life & Retirement segment markets 403(b) tax-qualified
fixed, fixed indexed and variable annuities; the Horace Mann
Retirement Advantage® open architecture platform for 403(b)(7) and
other defined contribution plans; and other retirement products to
educators as well as traditional term and whole life insurance
products. Horace Mann is one of the largest participants in the
K-12 educator portion of the 403(b) tax-qualified annuity market,
measured by 403(b) net premiums written on a statutory accounting
basis. The Life & Retirement segment represented 37% of 2021
total revenues and contributed $68.4 million to 2021 core
earnings.
($ in millions)
Three Months Ended
March 31,
2022
2021
Change
Life & Retirement net income / core
earnings*
$
11.8
$
11.4
3.5
%
Life & Retirement adjusted core
earnings*
14.0
11.1
26.1
%
Life annualized sales*
1.8
2.0
-10.0
%
Life mortality costs
12.2
14.6
-16.4
%
Net annuity contract deposits*
112.0
105.8
5.9
%
Annuity assets under management(1)
5,185.6
4,991.7
3.9
%
Total assets under administration(2)
9,078.8
8,926.1
1.7
%
(1)
Amount reported as of March 31, 2022
excludes $767.8 million of assets under management held under
modified coinsurance reinsurance.
(2)
Includes Annuity AUM, Brokerage and
Advisory AUA, and Recordkeeping AUA.
Life & Retirement segment core earnings were up 3.5% with
total benefits and expenses unchanged. Adjusted core earnings,
which excludes DAC unlocking, were up 26.1%.
For the Retirement business, net annuity contract deposits rose
5.9% over last year’s first quarter. Horace Mann’s relationship
with educators often begins with 403(b) retirement savings
products, including the company’s attractive annuity products,
which provide encouraging cross-sell opportunities. Total cash
value persistency remained strong at 94.3%. The net interest spread
was 286 points, up from a year ago, reflecting strong investment
returns.
Horace Mann currently has $5.2 billion in annuity assets under
management, including $2.2 billion of fixed annuities, $2.5 billion
of variable annuities and $0.5 billion of fixed indexed annuities.
Assets under administration, which includes Retirement Advantage
and other advisory and recordkeeping assets, was up 1.7% from a
year ago, as assets under management rose due to strong equity
market performance through the end of 2021.
Life annualized sales were slightly below last year with
persistency for life products of 96.2% remaining in line with prior
periods.
Supplemental & Group Benefits segment sales up over
2021 (All comparisons vs. same period in 2021, unless noted
otherwise)
The Supplemental & Group Benefits segment markets
employer-sponsored group worksite solutions for districts and other
public employers, as well as voluntary products typically
distributed through the worksite channel. The worksite business
provides group term life, disability and specialty health insurance
along with voluntary supplemental products including cancer, heart,
hospital, supplemental disability and accident coverages. The
Supplemental & Group Benefits segment represented 12% of 2021
total revenues and contributed $46.0 million to 2021 core
earnings.
($ in millions)
Three Months Ended
March 31,
2022
2021
Change
Supplemental & Group Benefits net
income / core earnings*
$
11.2
$
11.3
-0.9
%
Supplemental & Group Benefits adjusted
core earnings*
14.3
13.7
4.4
%
Pretax profit margin(1)
18.2
%
37.7
%
-19.5 pts
Net premiums earned
$
69.9
$
32.4
115.7
%
Voluntary products sales*
1.4
1.0
40.0
%
Employer-sponsored products sales*
2.3
—
N.M.
Voluntary products benefits ratio
29.3
%
30.9
%
-1.6 pts
Employer-sponsored products benefits
ratio
66.1
%
—
N.M.
(1)
Measured to total revenues.
Supplemental & Group Benefits segment core earnings were
down slightly with adjusted core earnings up 4.4%. Adjusted core
earnings exclude the non-cash impact of amortization of intangible
assets under purchase accounting that reduced core earnings by $3.9
million pretax vs. $2.9 million in the first quarter of 2021.
The pre-tax profit margin declined because of the addition of
the newly acquired employer-sponsored products, which are expected
to generate a lower margin than voluntary products. In the first
quarter, total benefits also reflected normal seasonality for the
employer-sponsored products.
Total sales for the segment were $3.7 million. Sales of
voluntary products were $1.4 million in the first quarter, a 40.0%
increase over prior year, with persistency remaining very strong at
92.1%. Sales of employer-sponsored products added another $2.3
million, in line with management’s expectations.
Consolidated Results
Horace Mann’s investment strategy is primarily focused on
generating income to support product liabilities, and balances
principal protection and risk. Total net investment income includes
net investment income on the investment portfolio managed by Horace
Mann, as well as accreted investment income on the deposit asset on
reinsurance related to the company’s reinsurance of policy
liabilities related to legacy individual annuities written in 2002
or earlier.
Investment income up 3% over prior year (All comparisons
vs. same period in 2021, unless noted otherwise)
($ in millions)
Three Months Ended
March 31,
2022
2021
Change
Pretax net investment income - investment
portfolio
$
73.0
$
71.1
2.7
%
Pretax investment income - deposit asset
on reinsurance
24.9
24.4
2.0
%
Total pretax net investment income
97.9
95.5
2.5
%
Pretax net investment losses
(15.5
)
(9.0
)
N.M.
Pretax net unrealized investment gains on
fixed maturity securities
16.7
363.6
-95.4
%
Investment yield on fixed income
portfolio, pretax - annualized
4.26
%
4.16
%
0.10 pts
N.M. - Not meaningful.
Total net investment income was up 2.5%, or $2.4 million. Net
investment income on the managed portfolio rose 2.7% due to yield
expansion in the core fixed income portfolio and growth in both the
commercial mortgage loan and limited partnership portfolios. The
company’s fixed maturity securities portfolio is in a net
unrealized investment gain position of $16.7 million pretax at
March 31, 2022.
Adjusted book value per share* up 5% year over year
At March 31, 2022, shareholders’ equity was $1.54 billion, or
$37.14 per share, as higher interest rates resulted in lower
unrealized gains in the fixed-maturity portfolio. Excluding net
unrealized investment gains on fixed maturity securities,
shareholders’ equity was $1.52 billion, or $36.65 per share.*
During the first quarter, Horace Mann repurchased 59,746 shares of
common stock at an average price of $37.14. As of March 31, 2022,
$13.1 million remained authorized for future share repurchases
under the share repurchase program.
At March 31, 2022, total debt was $502.7 million, with $249.0
million outstanding on the company’s line of credit. The ratio of
debt-to-capital excluding net unrealized investment gains* was
24.9% at March 31, 2022, which aligns with levels appropriate for
the company’s current financial strength ratings.
Segment outlook for 2022
Horace Mann’s outlook for 2022 reflects accretion from newly
acquired Madison National as well as estimates of the initial
contributions of strategic growth initiatives. Due to the impact of
inflation on auto loss costs as well as the potential impact of
market volatility on DAC unlocking, management’s expectation for
2022 EPS is now at the lower end of the $3.45-$3.65 guidance range
previously announced. Full-year net investment income from the
managed portfolio is estimated to be in line with 2021, with
limited partnership portfolio returns modeled closer to the
historical averages. Results for each segment will reflect
different considerations:
- Property & Casualty segment 2022 core earnings: In 2022,
the underlying auto loss ratio is expected to be higher than
original expectations due to inflation. The longer-term combined
ratio target remains 95-96%. The assumption for catastrophe losses
continues to be approximately 9.5 points on the combined ratio, in
line with the 10-year average. Net investment income in 2022 is
expected to be lower in this segment, as it benefited from strong
limited partnership returns in 2021.
- Life & Retirement segment 2022 core earnings: Net
investment income is expected to be up slightly compared to 2021,
maintaining the net investment spread near the 2021 level. The
assumption for mortality is a return to actuarial
expectations.
- Supplemental & Group Benefits segment 2022 core earnings:
Claims utilization is expected to be near pre-pandemic levels
leading to full-year 2022 benefit ratios of about 35% for voluntary
products and about 50% for employer-sponsored products.
Amortization of intangible assets is expected to be approximately
$13 million, or 30 cents per share (after tax).
About Horace Mann
Horace Mann Educators Corporation (NYSE: HMN) is the largest
financial services company focused on helping America’s educators
and others who serve the community achieve lifelong financial
success. The company offers individual and group insurance and
financial solutions tailored to the needs of the educational
community. Founded by Educators for Educators® in 1945, Horace Mann
is headquartered in Springfield, Illinois. For more information,
visit horacemann.com.
Quarterly webcast
Horace Mann’s senior management will discuss the company’s
first-quarter financial results with investors on May 6, 2022 at
11:00 a.m. Eastern Time. The conference call will be webcast live
at investors.horacemann.com and archived later in the day for
replay.
Safe Harbor Statement and Non-GAAP Measures
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 Annual Report on Form 10-K for the year ended December
31, 2021 and the company’s past and future filings and reports
filed with the Securities and Exchange Commission (SEC) for
information concerning important factors that could cause actual
results to differ materially from those in forward-looking
statements. Information contained in this news release include
measures which are based on methodologies other than accounting
principles generally accepted in the United States of America
(GAAP). Reconciliations of non-GAAP measures to the closest GAAP
measures are contained in the Appendix to the Investor Supplement
and additional descriptions of the non-GAAP measures are contained
in the Glossary of Selected Terms included as an exhibit to the
company’s SEC filings.
($ in millions, except per share
data)
Three Months Ended
March 31,
2022
2021
% Change
Earnings Summary
Net income
$
14.5
$
39.3
-63.1
%
Net investment losses , after tax
(12.2
)
(7.1
)
N.M.
Core earnings*
26.7
46.4
-42.5
%
Adjusted core earnings*
32.0
48.5
-34.0
%
Per diluted share:
Net income
$
0.35
$
0.93
-62.4
%
Net investment losses , after tax
(0.29
)
(0.17
)
N.M.
Core earnings*
0.64
1.10
-41.8
%
Adjusted core earnings*
0.76
1.15
-33.9
%
Weighted average number of shares and
equivalent shares (in millions) - Diluted
42.1
42.1
—
%
Return on Equity
Net income return on equity - LTM(1)
6.8
%
9.3
%
Net income return on equity -
annualized
3.5
%
9.0
%
Core return on equity - LTM*(2)
8.8
%
11.2
%
Core return on equity - annualized*
7.0
%
12.9
%
Adjusted core return on equity -
LTM*(3)
9.7
%
11.7
%
Adjusted core return on equity -
annualized*
8.4
%
13.5
%
Financial Position
Per share:(4)
Book value
$
37.14
$
40.83
-9.0
%
Effect of net unrealized investment gains
on fixed maturity securities(5)
$
0.49
$
5.88
-91.7
%
Dividends paid
$
0.32
$
0.31
3.2
%
Ending number of shares outstanding (in
millions)(4)
41.4
41.5
-0.2
%
Total assets
$
14,427.4
$
13,745.5
5.0
%
Short-term debt
249.0
135.0
84.4
%
Long-term debt
253.7
302.4
-16.1
%
Total shareholders’ equity
1,536.8
1,692.9
-9.2
%
Additional Information
Net investment losses
Before tax
$
(15.5
)
$
(9.0
)
N.M.
After tax
(12.2
)
(7.1
)
N.M.
Per share, diluted
$
(0.29
)
$
(0.17
)
N.M.
N.M. - Not meaningful.
(1)
Based on last twelve months net income and
average quarter-end shareholders’ equity.
(2)
Based on last twelve months core earnings
and average quarter-end shareholders’ equity which has been
adjusted to exclude the fair value adjustment for investments, net
of the related impact on deferred policy acquisition costs and
applicable deferred taxes.
(3)
Based on last twelve months adjusted core
earnings and average quarter-end shareholders’ equity which has
been adjusted to exclude the fair value adjustment for investments,
net of the related impact on deferred policy acquisition costs and
applicable deferred taxes.
(4)
Ending shares outstanding were 41,381,082
at March 31, 2022 and 41,466,646 at March 31, 2021.
(5)
Net of the related impact on deferred
policy acquisition costs and applicable deferred taxes.
HORACE MANN EDUCATORS CORPORATION
Consolidated Statements of
Operations and Data (Unaudited)
($ in millions)
Three Months Ended
March 31,
2022
2021
% Change
Consolidated Statements of
Operations
Net premiums and contract charges
earned
$
255.9
$
227.6
12.4
%
Net investment income
97.9
95.5
2.5
%
Net investment losses
(15.5
)
(9.0
)
N.M.
Other income
8.5
7.9
7.6
%
Total revenues
346.8
322.0
7.7
%
Benefits, claims and settlement
expenses
177.0
134.3
31.8
%
Interest credited
40.8
50.6
-19.4
%
Operating expenses
76.8
58.0
32.4
%
DAC unlocking and amortization expense
26.4
24.1
9.5
%
Intangible asset amortization expense
4.2
3.3
27.3
%
Interest expense
3.9
3.5
11.4
%
Total benefits, losses and expenses
329.1
273.8
20.2
%
Income before income taxes
17.7
48.2
-63.3
%
Income tax expense
3.2
8.9
-64.0
%
Net income
$
14.5
$
39.3
-63.1
%
Net Premiums Written and Contract
Deposits*
Property & Casualty
$
139.6
$
141.8
-1.6
%
Life & Retirement
136.4
130.3
4.7
%
Supplemental & Group Benefits
70.2
32.3
117.3
%
Total
$
346.2
$
304.4
13.7
%
Segment Net Income (Loss)
Property & Casualty
$
8.5
$
27.9
-69.5
%
Life & Retirement
11.8
11.4
3.5
%
Supplemental & Group Benefits
11.2
11.3
-0.9
%
Corporate & Other(1)
(17.0
)
(11.3
)
-50.4
%
Net income
$
14.5
$
39.3
-63.1
%
N.M. - Not meaningful.
(1)
Corporate & Other includes interest
expense on debt and the impact of net investment gains and losses
and other Corporate level items. The Company does not allocate the
impact of corporate level transactions to the insurance segments
consistent with how management evaluates the results of those
segments. See detail for this segment on page 13.
HORACE MANN EDUCATORS
CORPORATION
Business Segment Overview
(Unaudited)
($ in millions)
Three Months Ended
March 31,
2022
2021
Change
Property & Casualty
Net premiums written*
$
139.6
$
141.8
-1.6
%
Net premiums earned
150.2
155.8
-3.6
%
Net investment income
7.2
10.8
-33.3
%
Other income
0.8
2.1
-61.9
%
Losses and loss adjustment expenses
(LAE)
108.3
94.7
14.4
%
Operating expenses (includes amortization
expense)
39.4
39.5
-0.3
%
Interest expense
—
0.1
-100.0
%
Income before income taxes
10.5
34.4
-69.5
%
Net income / core earnings*
8.5
27.9
-69.5
%
Net investment income, after tax
6.1
9.0
-32.2
%
Catastrophe losses
After tax
5.7
8.7
-34.5
%
Before tax
7.3
11.0
-33.6
%
Prior years’ reserve development, before
tax(1)
Auto
—
—
—
%
Property and other
—
—
—
%
Total
—
—
—
%
Operating statistics:
Loss and loss adjustment expense ratio
72.1
%
60.8
%
11.3 pts
Expense ratio
26.3
%
25.4
%
0.9 pts
Combined ratio
98.4
%
86.2
%
12.2 pts
Effect on the combined ratio of:
Catastrophe losses
4.8
%
7.0
%
-2.2 pts
Prior years’ reserve development(1)
—
%
—
%
— pts
Combined ratio excluding the effects
of
catastrophe losses and prior years’
reserve
development (underlying combined
ratio)*
93.6
%
79.2
%
14.4 pts
Risks in force (in thousands)
547
575
-4.9
%
Auto(2)
372
393
-5.3
%
Property
175
182
-3.8
%
Household Retention - LTM
Auto(3)
86.5
%
83.5
%
3.0 pts
Property(3)
89.3
%
87.2
%
2.1 pts
N.M. - Not meaningful.
(1)
(Favorable) unfavorable.
(2)
Includes assumed risks in force of 4.
(3)
Retention is based on retained households.
History has been restated to reflect this change.
HORACE MANN EDUCATORS
CORPORATION
Business Segment Overview
(Unaudited)
($ in millions)
Three Months Ended
March 31,
2022
2021
Change
Life & Retirement
Net premiums written and contract
deposits*
$
136.4
$
130.3
4.7
%
Net premiums and contract charges
earned
35.8
39.4
-9.1
%
Net investment income
84.2
79.9
5.4
%
Other income
4.9
4.8
2.1
%
Death benefits / mortality cost(1)
12.2
14.6
-16.4
%
Interest credited
40.7
50.5
-19.4
%
Change in reserves
21.7
15.0
44.7
%
Operating expenses
25.8
23.7
8.9
%
DAC amortization expense, excluding
unlocking
7.4
6.9
7.2
%
DAC unlocking
2.5
(0.6
)
N.M.
Intangible asset amortization expense
0.3
0.4
-25.0
%
Income before income taxes
14.3
13.6
5.1
%
Income tax expense (benefit)
2.5
2.2
13.6
%
Net income
11.8
11.4
3.5
%
Core earnings*
11.8
11.4
3.5
%
Adjusted core earnings*
14.0
11.1
26.1
%
Life policies in force (in thousands)
163
163
—
%
Life insurance in force
$
19,595
$
19,028
3.0
%
Lapse ratio - 12 months(1)
3.8
%
3.9
%
-0.1 pts
Annuity contracts in force (in
thousands)
229
230
-0.4
%
Retirement Advantage® contracts in force
(in thousands)
16
13
23.1
%
Total Persistency - LTM
94.3
%
95.0
%
-0.7 pts
N.M. - Not meaningful.
(1)
Ordinary life insurance.
HORACE MANN EDUCATORS
CORPORATION
Business Segment Overview
(Unaudited)
($ in millions)
Three Months Ended
March 31,
2022
2021
Change
Supplemental & Group
Benefits
Net premiums and contract charges
earned
$
69.9
$
32.4
115.7
%
Net investment income
7.1
5.4
31.5
%
Other income
1.6
0.7
128.6
%
Benefits, settlement expenses and change
in reserves
34.8
10.0
248.0
%
Interest credited
0.1
0.1
—
%
Operating expenses (includes DAC unlocking
and amortization expense)
25.5
11.0
131.8
%
Intangible asset amortization expense
3.9
2.9
34.5
%
Income before income taxes
14.3
14.5
-1.4
%
Net income / core earnings*
11.2
11.3
-0.9
%
Adjusted core earnings*
14.3
13.7
4.4
%
Benefits ratio(1)
49.9
%
31.2
%
18.7 pts
Operating expense ratio(2)
32.4
%
28.6
%
3.8 pts
Pretax profit margin(3)
18.2
%
37.7
%
-19.5 pts
Voluntary products benefits ratio
29.3
%
30.9
%
-1.6 pts
Voluntary premium persistency (rolling 12
months)
92.1
%
91.5
%
0.6 pts
Employer-sponsored products benefits
ratio
66.1
%
—
%
N.M.
N.M. - Not meaningful.
(1)
Ratio of benefits to net premiums
earned.
(2)
Ratio of operating expenses to total
revenues.
(3)
Ratio of income before taxes to total
revenues.
HORACE MANN EDUCATORS
CORPORATION
Business Segment Overview
(Unaudited)
($ in millions)
Three Months Ended
March 31,
2022
2021
% Change
Corporate & Other(1)
Components of loss before tax:
Net investment losses
$
(15.5
)
$
(9.0
)
N.M.
Interest expense
(3.9
)
(3.4
)
-14.7
%
Other operating expenses, net investment
income and other income
(2.0
)
(1.9
)
-5.3
%
Loss before income taxes
(21.4
)
(14.3
)
-49.7
%
Net loss
(17.0
)
(11.3
)
-50.4
%
Investments
Life & Retirement
Fixed maturity securities, at fair value
(amortized
cost, net 2022, $4,640.3; 2021,
$4,633.2)
$
4,660.0
$
4,918.0
-5.2
%
Equity securities, at fair value
99.5
91.4
8.9
%
Short-term investments
15.4
87.0
-82.3
%
Policy loans
140.1
146.7
-4.5
%
Limited partnership interests
567.3
329.9
72.0
%
Other investments
60.5
58.4
3.6
%
Total Life & Retirement
investments
5,542.8
5,631.4
-1.6
%
Property & Casualty
Fixed maturity securities, at fair value
(amortized
cost, net 2022, $629.6; 2021, $787.6)
640.7
846.4
-24.3
%
Equity securities, at fair value
18.1
41.4
-56.3
%
Short-term investments
3.4
3.6
-5.6
%
Limited partnership interests
182.7
138.0
32.4
%
Other investments
1.1
1.1
—
%
Total Property & Casualty
investments
846.0
1,030.5
-17.9
%
Supplemental & Group Benefits
Fixed maturity securities, at fair value
(amortized
cost, net 2022, $700.8; 2021, $572.0)
686.7
591.9
16.0
%
Equity securities, at fair value
8.2
6.2
32.3
%
Short-term investments
108.0
9.0
N.M.
Policy loans
0.9
0.9
—
%
Limited partnership interests
51.9
37.3
39.1
%
Other investments
7.5
2.7
177.8
%
Total Supplemental & Group Benefits
investments
863.2
648.0
33.2
%
Corporate & Other
Equity securities, at fair value
1.0
1.0
—
%
Short-term investments
0.1
2.2
-95.5
%
Total Corporate & Other
investments
1.1
3.2
-65.6
%
Total investments
$
7,253.1
$
7,313.1
-0.8
%
Net investment income - investment
portfolio
Before tax
$
73.0
$
71.1
2.7
%
After tax
58.1
56.6
2.7
%
Investment income - deposit asset on
reinsurance
Before tax
$
24.9
24.4
2.0
%
After tax
19.7
19.3
2.1
%
N.M. - Not meaningful.
(1)
The Corporate & Other segment includes
interest expense on debt and the impact of investment gains and
losses and other corporate level items. The Company does not
allocate the impact of corporate level transactions to the
insurance segments consistent with how management evaluates the
results of those segments.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20220505006083/en/
Heather J. Wietzel, Vice President, Investor Relations
217-788-5144 | investorrelations@horacemann.com
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