- Second-quarter net loss of $0.30 per share and core loss* of
$0.01 per share
- Reflects previously announced elevated catastrophe losses,
impact of inflation on auto loss severity and equity market
declines
- Seeing continued sales momentum entering back-to-school season,
including voluntary Supplemental sales up 83%
- Supplemental & Group Benefits segment earnings up 10%;
includes Madison National’s suite of employer-sponsored benefit
products for K-12 school districts this year
- Net investment income from managed portfolio contributed $79
million, in line with expectations
- $24 million used to repurchase 670,816 shares between January
and July 2022
- Revised 2022 full-year core EPS guidance upward slightly to
$2.15 to $2.35 to reflect actual second-quarter results
- Full-year 2022 net investment income from managed portfolio
remains on track
- Expects to resume trajectory toward sustainable double-digit
ROEs
Horace Mann Educators Corporation (NYSE:HMN) today reported
financial results for the three months ended June 30, 2022:
($ in millions, except per share
amounts)
Three Months Ended
June 30,
Six Months Ended
June 30,
2022
2021
% Change
2022
2021
% Change
Total revenues
$
346.3
$
347.1
-0.2
%
$
693.1
$
669.1
3.6
%
Net income (loss)
(12.5
)
46.7
-126.8
%
2.0
86.0
-97.7
%
Net investment gains (losses) after
tax
(12.2
)
3.9
N.M.
(24.4
)
(3.2
)
N.M.
Core earnings (loss)*
(0.3
)
42.8
-100.7
%
26.4
89.2
-70.4
%
Adjusted core earnings*
5.9
45.0
-86.9
%
37.9
93.5
-59.5
%
Per diluted share:
Net income (loss)
(0.30
)
1.11
-127.0
%
0.05
2.04
-97.5
%
Net investment gains (losses) after
tax
(0.29
)
0.09
N.M.
(0.58
)
(0.08
)
N.M.
Core earnings (loss) per diluted
share*
(0.01
)
1.02
-101.0
%
0.63
2.12
-70.3
%
Adjusted core earnings per diluted
share*
0.14
1.07
-86.9
%
0.90
2.22
-59.5
%
Book value per share
30.59
43.78
-30.1
%
Adjusted book value per share*
35.94
35.78
0.4
%
Tangible book value per share*
29.83
31.08
-4.0
%
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.
“At the core of our company is a dedication to and respect for
the education profession, and we remain more committed to that
mission than ever,” said Horace Mann President and CEO Marita
Zuraitis. “In the second quarter, our policyholders were affected
by a number of severe weather events, and our claims team worked
tirelessly to fulfill our promise to be there when our customers
need us.
“We are seeing steady progress in our ability to engage with
educators,” Zuraitis continued. “As the more severe effects of the
pandemic are receding, educators are finding they have more time to
devote to planning for their future, and improving school access
continues to expand our options for virtual and in-person
interactions. When educators return to classrooms later this month,
we will be there to help them meet new challenges and prepare for a
lifetime of financial success. Our teams will be working with
school districts to provide financial workshops on topics like
Student Loan Solutions and retirement readiness, enrolling new
participants in benefit programs, and having individual discussions
with educators about how to best protect what they have today and
prepare for a successful tomorrow.
“Reflecting final second-quarter results, we now expect
full-year 2022 core EPS between $2.15 and $2.35 due to the
significant level of catastrophe losses, effects of equity market
declines and inflation,” Zuraitis said. “While we are disappointed
that this confluence of external events has temporarily interrupted
our progress toward our long-term objectives, we believe our
response is appropriate, including additional rate action as
needed. We remain confident in our strategy to achieve a larger
share of the education market. As we look to 2023, we expect return
on equity will be in the high-single digits as we resume our
trajectory toward sustainable double-digit ROEs.
“Our capital generating capacity is strong, and we remain
committed to driving shareholder value,” Zuraitis concluded. “While
deploying capital for growth is a key priority, we continue to
focus on providing an attractive shareholder return through both
cash dividends and share repurchase. Through the end of July, we
used $24 million to repurchase 670,816 shares this year at an
average price of $35.82, actively utilizing our recent $50 million
share repurchase authorization.”
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 higher
catastrophe losses and impact of inflation (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
June 30,
Six Months Ended
June 30,
2022
2021
Change
2022
2021
Change
Property & Casualty net premiums
written*
$
158.0
$
155.6
1.5
%
$
297.6
$
297.4
0.1
%
Property & Casualty net income (loss)
/ core earnings (loss)*
(25.4
)
19.3
-231.6
%
(16.9
)
47.2
-135.8
%
Property & Casualty combined ratio
126.9
%
99.2
%
27.7 pts
112.6
%
92.7
%
19.9 pts
Property & Casualty underlying loss
ratio*
65.7
%
64.9
%
0.8 pts
66.4
%
59.5
%
6.9 pts
Property & Casualty expense ratio
26.7
%
25.7
%
1.0 pts
26.5
%
25.5
%
1.0 pts
Property & Casualty catastrophe
losses
30.5
%
11.3
%
19.2 pts
17.7
%
9.1
%
8.6 pts
Property & Casualty underlying
combined ratio*
92.4
%
90.6
%
1.8 pts
92.9
%
85.0
%
7.9 pts
Auto combined ratio
119.3
%
93.3
%
26.0 pts
110.6
%
88.7
%
21.9 pts
Auto underlying loss ratio*
76.9
%
68.0
%
8.9 pts
76.2
%
63.3
%
12.9 pts
Property combined ratio
141.0
%
110.8
%
30.2 pts
116.6
%
100.5
%
16.1 pts
Property underlying loss ratio*
44.7
%
59.2
%
-14.5 pts
48.5
%
51.5
%
-3.0 pts
The Property & Casualty segment core loss primarily
reflected the previously announced catastrophe losses as well as
the impact of inflation and other factors on auto results, which
resulted in a higher segment combined ratio. Segment net investment
income was $7.7 million, reflecting limited partnership fund
returns impacted by equity market declines, down from $21.7 million
in last year’s second quarter, when outsized returns in the limited
partnership fund portfolio benefited this segment.
Catastrophe losses were $45.7 million from 22 severe
thunderstorm, wind and hail events concentrated in Midwest and
Plains states. The level of second-quarter catastrophe losses was
well above the company’s 10-year historical average of $26 million.
Property delivered a strong underlying loss ratio of 44.7% on lower
non-catastrophe fire losses. Property prior-accident year reserve
releases lowered the property combined ratio by 11.4%.
The auto underlying loss ratio increased 8.9 points due to the
impact of inflation and other loss cost factors, including the
industry trends toward more severe accidents and increased
utilization of medical treatments. The company continues to
implement rate and other underwriting changes that address these
trends. In addition, as previously announced, the auto combined
ratio reflected auto prior-accident year reserve strengthening to
address pandemic-related systemic delays that are affecting the
settlement of claims from recent accident years that remain
open.
As expected, Property & Casualty net premiums written were
slightly above last year’s second quarter. Property average net
premiums were up about 8% as inflation adjustments to coverage
values began to take effect. Planned rate changes over the next 12
to 18 months will reflect increased weather activity. We expect the
overall impact of rate and inflation factors on average premiums
rising to the mid-teens over the next 12 to 18 months.
Auto average net premiums were up about 2% as pandemic-related
mileage changes have stabilized. The auto rate plan for the
remainder of 2022 and throughout 2023 reflects rate increases in
the high-single to low double-digit range in states representing
almost 80% of our premiums.
Life & Retirement segment core earnings up 5% on strong
net investment income (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
June 30,
Six Months Ended
June 30,
2022
2021
Change
2022
2021
Change
Life & Retirement net income / core
earnings*
$
17.3
$
16.5
4.8
%
$
29.1
$
27.9
4.3
%
Life & Retirement adjusted core
earnings*
20.4
16.4
24.4
%
34.4
27.5
25.1
%
Life annualized sales*
2.2
2.4
-8.3
%
4.0
4.4
-9.1
%
Life mortality costs
8.2
8.5
-3.5
%
20.4
23.1
-11.7
%
Net annuity contract deposits*
104.2
117.4
-11.2
%
216.2
223.2
-3.1
%
Annuity assets under management(1)
4,889.1
5,173.1
-5.5
%
Total assets under administration(2)
8,257.9
9,319.4
-11.4
%
(1)
Amount reported as of June 30, 2022
excludes $658.4 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 4.8% with
total benefits and expenses largely unchanged. Adjusted core
earnings, which excludes DAC unlocking, were up 24.4% with segment
net investment income up 8.2%. DAC unlocking for the second quarter
was driven primarily by the impact of the equity market
decline.
For the Retirement business, net annuity contract deposits were
$104.2 million, below last year’s strong second quarter. Educators
continue to begin their relationship with Horace Mann through
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
94.1%. The net interest spread was 303 points, up from a year ago,
reflecting strong investment returns.
Horace Mann currently has $4.9 billion in annuity assets under
management, including $2.2 billion of fixed annuities, $2.2 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 down from a year
ago largely due to the effect of equity market performance on
assets under management.
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
June 30,
Six Months Ended
June 30,
2022
2021
Change
2022
2021
Change
Supplemental & Group Benefits net
income /
core earnings*
13.2
12.0
10.0
%
$
24.4
$
23.3
4.7
%
Supplemental & Group Benefits
adjusted
core earnings*
16.3
14.3
14.0
%
30.6
28.0
9.3
%
Pretax profit margin(1)
22.5
%
39.2
%
-16.7 pts
20.3
%
38.4
%
-18.1 pts
Net premiums earned
$
69.1
$
32.3
113.9
%
$
139.0
$
64.7
114.8
%
Voluntary products sales*
2.2
1.2
83.3
%
3.6
2.2
63.6
%
Employer-sponsored products sales*
1.3
—
N.M.
3.6
—
N.M.
Voluntary products benefits ratio
34.3
%
31.3
%
3.0 pts
31.8
%
31.1
%
0.7 pts
Employer-sponsored products benefits
ratio
42.6
%
—
N.M.
54.4
%
—
N.M.
(1) Measured to total revenues.
Supplemental & Group Benefits segment core earnings were up
10.0% with adjusted core earnings up 14.0%. 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. $3.0 million in the second quarter of 2021.
Segment net investment income rose 50.0%, largely due to the
addition of the Madison National portfolio in 2022.
The pre-tax profit margin reflected the addition of the newly
acquired employer-sponsored products. Year-to-date benefit ratios
for the voluntary and employer-sponsored products lines are near
longer-term targets, despite expected quarterly fluctuations due to
seasonality and other factors.
Total sales for the segment were $3.5 million. Sales of
voluntary products were $2.2 million, a 83.3% increase over prior
year, with persistency remaining very strong at 92.0%. Sales of
employer-sponsored products added another $1.3 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.
Net investment income of $105 million on track to full-year
guidance (All comparisons vs. same period in 2021, unless noted
otherwise)
($ in millions)
Three Months Ended
June 30,
Six Months Ended
June 30,
2022
2021
Change
2022
2021
Change
Pretax net investment income - investment
portfolio
$
79.4
$
84.1
-5.6
%
$
152.4
$
155.2
-1.8
%
Pretax investment income - deposit asset
on
reinsurance
25.8
25.1
2.8
%
50.7
49.5
2.4
%
Total pretax net investment income
105.2
109.2
-3.7
%
203.1
204.7
-0.8
%
Pretax net investment gains (losses)
(15.5
)
4.9
N.M.
(31.0
)
(4.1
)
N.M.
Pretax net unrealized investment gains
(losses) on fixed maturity securities
(358.5
)
505.6
-170.9
%
Investment yield, excluding limited
partnership interests, pretax - annualized
4.28
%
4.22
%
0.06 pts
4.29
%
4.20
%
0.09 pts
N.M. - Not meaningful.
Total net investment income was down $4.0 million. Net
investment income on the managed portfolio was down $4.7 million as
returns on the limited partnership portfolio, while still elevated
over historical levels, are lower than the outsized returns last
year. Net investment income benefited from yield expansion in the
core fixed income portfolio and higher balances in both the
commercial mortgage loan and limited partnership portfolios. The
company’s fixed maturity securities portfolio is in a net
unrealized investment loss position of $358.5 million pretax at
June 30, 2022, primarily due to the rising interest rate
environment.
Adjusted book value per share* flat year over year
At June 30, 2022, shareholders’ equity was $1.26 billion, or
$30.59 per share, as higher interest rates resulted in net
unrealized investment losses on fixed maturity securities.
Excluding the unrealized losses, shareholders’ equity was $1.48
billion, or $35.94 per share*. During the second quarter, Horace
Mann repurchased 315,625 shares of common stock at an average price
of $37.40. As of June 30, 2022, $1.3 million remained authorized
for future share repurchases under the share repurchase program
authorized in 2015, and $50.0 million remained open under the share
repurchase program authorized in 2022.
At June 30, 2022, total debt was $497.8 million, with $249.0
million outstanding on the company’s line of credit. The ratio of
debt-to-capital excluding net unrealized investment gains/losses*
was 25.2% at June 30, 2022, which aligns with levels appropriate
for the company’s current financial strength ratings.
Segment outlook for 2022
Horace Mann’s expectation for 2022 core EPS is now $2.15 to
$2.35. As previously announced, total net investment income from
the managed portfolio for 2022 is expected to be at the low end of
the guided range of $310 million to $320 million. This largely
reflects net investment income on the core portfolio at the low end
of expectations due to lower portfolio balances resulting from
elevated catastrophe losses. Due to equity market declines, returns
on limited partnership funds are now expected to be below
historical averages for the second half of the year.
Results for each segment will reflect different
considerations:
- Property & Casualty segment 2022 core earnings expected to
be in the range of $10 million to $14 million, reflecting
first-half results: The full-year 2022 guidance reflects the
company’s assumption that catastrophe losses in the second half of
the year will contribute between $20 million and $22 million,
pretax, unchanged from previous guidance and in line with the
10-year average for second-half catastrophe losses.
- Life & Retirement segment 2022 core earnings expected to be
in the range of $56 million to $59 million, reflecting first-half
results: The full-year net investment spread now expected to be
slightly below the 2021 level of 290 due to the revised outlook for
net investment income.
- Supplemental & Group Benefits segment 2022 core earnings
expected to be at the low end of the guided range of $47 million to
$50 million: Expectations for full-year 2022 benefit ratios
continue to be about 35% for voluntary products and about 50% for
employer-sponsored products.
Quarterly webcast
Horace Mann’s senior management will discuss the company’s
second-quarter financial results with investors on August 5, 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.
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.
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.
# # #
HORACE MANN EDUCATORS
CORPORATION
Financial Highlights
(Unaudited)
($ in millions, except per share
data)
Three Months Ended
June 30,
Six Months Ended
June 30,
2022
2021
% Change
2022
2021
% Change
Earnings Summary
Net income (loss)
$
(12.5
)
$
46.7
-126.8
%
$
2.0
$
86.0
-97.7
%
Net investment gains (losses), after
tax
(12.2
)
3.9
N.M.
(24.4
)
(3.2
)
N.M.
Core earnings (loss)*
(0.3
)
42.8
-100.7
%
26.4
89.2
-70.4
%
Adjusted core earnings*
5.9
45.0
-86.9
%
37.9
93.5
-59.5
%
Per diluted share:
Net income (loss)
$
(0.30
)
$
1.11
-127.0
%
$
0.05
$
2.04
-97.5
%
Net investment gains (losses), after
tax
(0.29
)
0.09
N.M.
(0.58
)
(0.08
)
N.M.
Core earnings (loss)*
(0.01
)
1.02
-101.0
%
0.63
2.12
-70.3
%
Adjusted core earnings*
0.14
1.07
-86.9
%
0.90
2.22
-59.5
%
Weighted average number of shares and
equivalent shares (in millions) -
Diluted
41.8
42.1
-0.7
%
42.0
42.1
-0.2
%
Return on Equity
Net income return on equity - LTM(1)
3.6
%
9.8
%
3.6
%
9.8
%
Net income return on equity -
annualized
(3.6
) %
10.6
%
0.3
%
9.5
%
Core return on equity - LTM*(2)
5.9
%
12.1
%
5.9
%
12.1
%
Core return on equity - annualized*
(0.1
) %
11.7
%
3.5
%
12.3
%
Adjusted core return on equity -
LTM*(3)
7.0
%
12.7
%
7.0
%
12.7
%
Adjusted core return on equity -
annualized*
1.6
%
12.3
%
5.1
%
12.9
%
Financial Position
Per share:(4)
Book value
$
30.59
$
43.78
-30.1
%
Effect of net unrealized investment gains
(losses) on fixed maturity securities(5)
$
(5.35
)
$
8.00
-166.9
%
Dividends paid
$
0.32
$
0.31
3.2
%
$
0.64
$
0.62
3.2
%
Ending number of shares outstanding (in
millions)(4)
41.2
41.5
-0.7
%
Total assets
$
13,758.5
$
14,190.1
-3.0
%
Short-term debt
249.0
135.0
84.4
%
Long-term debt
248.8
278.5
-10.7
%
Total shareholders’ equity
1,260.1
1,816.6
-30.6
%
Additional Information
Net investment gains (losses)
Before tax
$
(15.5
)
$
4.9
N.M.
$
(31.0
)
$
(4.1
)
N.M.
After tax
(12.2
)
3.9
N.M.
(24.4
)
(3.2
)
N.M.
Per share, diluted
$
(0.29
)
$
0.09
N.M.
$
(0.58
)
$
(0.08
)
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 41,189,337
at June 30, 2022 and 41,490,283 at June 30, 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
June 30,
Six Months Ended
June 30,
2022
2021
% Change
2022
2021
% Change
Consolidated Statements of
Operations
Net premiums and contract charges
earned
$
255.8
$
225.8
13.3
%
$
511.7
$
453.4
12.9
%
Net investment income
105.2
109.2
-3.7
%
203.1
204.7
-0.8
%
Net investment gains (losses)
(15.5
)
4.9
N.M.
(31.0
)
(4.1
)
N.M.
Other income
0.8
7.2
-88.9
%
9.3
15.1
-38.4
%
Total revenues
346.3
347.1
-0.2
%
693.1
669.1
3.6
%
Benefits, claims and settlement
expenses
207.6
147.1
41.1
%
384.6
281.4
36.7
%
Interest credited
42.4
51.2
-17.2
%
83.2
101.8
-18.3
%
Operating expenses
77.3
60.5
27.8
%
154.1
118.5
30.0
%
DAC unlocking and amortization expense
27.0
23.5
14.9
%
53.4
47.6
12.2
%
Intangible asset amortization expense
4.2
3.2
31.3
%
8.4
6.5
29.2
%
Interest expense
4.3
3.5
22.9
%
8.2
7.0
17.1
%
Total benefits, losses and expenses
362.8
289.0
25.5
%
691.9
562.8
22.9
%
Income (loss) before income taxes
(16.5
)
58.1
-128.4
%
1.2
106.3
-98.9
%
Income tax expense (benefit)
(4.0
)
11.4
-135.1
%
(0.8
)
20.3
-103.9
%
Net income (loss)
$
(12.5
)
$
46.7
-126.8
%
$
2.0
$
86.0
-97.7
%
Net Premiums Written and Contract
Deposits*
Property & Casualty
$
158.0
$
155.6
1.5
%
$
297.6
$
297.4
0.1
%
Life & Retirement
133.6
146.3
-8.7
%
270.0
276.6
-2.4
%
Supplemental & Group Benefits
68.3
32.3
111.5
%
138.5
64.6
114.4
%
Total
$
359.9
$
334.2
7.7
%
$
706.1
$
638.6
10.6
%
Segment Net Income (Loss)
Property & Casualty
$
(25.4
)
$
19.3
-231.6
%
$
(16.9
)
$
47.2
-135.8
%
Life & Retirement
17.3
16.5
4.8
%
29.1
27.9
4.3
%
Supplemental & Group Benefits
13.2
12.0
10.0
%
24.4
23.3
4.7
%
Corporate & Other(1)
(17.6
)
(1.1
)
N.M.
(34.6
)
(12.4
)
N.M
Consolidated net income (loss)
$
(12.5
)
$
46.7
-126.8
%
$
2.0
$
86.0
-97.7
%
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
June 30,
Six Months Ended
June 30,
2022
2021
Change
2022
2021
Change
Property & Casualty
Net premiums written*
$
158.0
$
155.6
1.5
%
$
297.6
$
297.4
0.1
%
Net premiums earned
149.9
155.0
-3.3
%
300.1
310.8
-3.4
%
Net investment income
7.7
21.7
-64.5
%
14.9
32.5
-54.2
%
Other income
1.2
1.2
—
%
2.0
3.3
-39.4
%
Losses and loss adjustment expenses
(LAE)
150.2
114.0
31.8
%
258.5
208.7
23.9
%
Operating expenses (includes amortization
expense)
40.1
39.9
0.5
%
79.5
79.4
0.1
%
Interest expense
—
—
N.M.
—
0.1
-100.0
%
Income (loss) before income taxes
(31.5
)
24.0
-231.3
%
(21.0
)
58.4
-136.0
%
Net income (loss)
(25.4
)
19.3
-231.6
%
(16.9
)
47.2
-135.8
%
Core earnings (loss)*
(25.4
)
19.3
-231.6
%
(16.9
)
47.2
-135.8
%
Net investment income, after tax
6.5
17.7
-63.3
%
12.6
26.7
-52.8
%
Catastrophe losses
After tax
36.2
13.8
162.3
%
41.9
22.5
86.2
%
Before tax
45.7
17.5
161.1
%
53.0
28.5
86.0
%
Prior years’ reserve development, before
tax(1)
Auto
12.0
(3.0
)
N.M.
12.0
(3.0
)
N.M.
Property and other
(6.0
)
(1.2
)
N.M.
(6.0
)
(1.2
)
N.M.
Total
6.0
(4.2
)
N.M.
6.0
(4.2
)
N.M.
Operating statistics:
Loss and loss adjustment expense ratio
100.2
%
73.5
%
26.7 pts
86.1
%
67.2
%
18.9 pts
Expense ratio
26.7
%
25.7
%
1.0 pts
26.5
%
25.5
%
1.0 pts
Combined ratio
126.9
%
99.2
%
27.7 pts
112.6
%
92.7
%
19.9 pts
Effect on the combined ratio of:
Catastrophe losses
30.5
%
11.3
%
19.2 pts
17.7
%
9.1
%
8.6 pts
Prior years’ reserve development(1)
4.0
%
-2.7
%
6.7 pts
2.0
%
-1.4
%
3.4 pts
Combined ratio excluding the effects
of
catastrophe losses and prior years’
reserve
development (underlying combined
ratio)*
92.4
%
90.6
%
1.8 pts
92.9
%
85.0
%
7.9 pts
Risks in force (in thousands)
545
567
-3.9
%
Auto(2)
371
387
-4.1
%
Property
174
180
-3.3
%
Household Retention - LTM
Auto(3)
86.8
%
83.9
%
2.9 pts
Property(3)
89.5
%
87.4
%
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
June 30,
Six Months Ended
June 30,
2022
2021
Change
2022
2021
Change
Life & Retirement
Net premiums written and contract
deposits*
$
133.6
$
146.3
-8.7
%
$
270.0
$
276.6
-2.4
%
Net premiums and contract charges
earned
36.8
38.5
-4.4
%
72.6
77.9
-6.8
%
Net investment income
88.4
81.7
8.2
%
172.6
161.6
6.8
%
Other income
4.4
5.0
-12.0
%
9.3
9.8
-5.1
%
Death benefits / mortality cost(1)
8.2
8.5
-3.5
%
20.4
23.1
-11.7
%
Interest credited
42.2
51.1
-17.4
%
82.9
101.6
-18.4
%
Change in reserves
22.5
14.5
55.2
%
44.2
29.5
49.8
%
Operating expenses
24.8
24.6
0.8
%
50.6
48.3
4.8
%
DAC amortization expense, excluding
unlocking
7.2
6.6
9.1
%
14.6
13.5
8.1
%
DAC unlocking
3.7
(0.4
)
N.M
6.2
(1.0
)
N.M.
Intangible asset amortization expense
0.3
0.2
50.0
%
0.6
0.6
—
%
Income before income taxes
20.7
20.1
3.0
%
35.0
33.7
3.9
%
Income tax expense
3.4
3.6
-5.6
%
5.9
5.8
1.7
%
Net income
17.3
16.5
4.8
%
29.1
27.9
4.3
%
Core earnings*
17.3
16.5
4.8
%
29.1
27.9
4.3
%
Adjusted core earnings*
20.4
16.4
24.4
%
34.4
27.5
25.1
%
Life policies in force (in thousands)
162
163
-0.6
%
Life insurance in force
$
19,714
$
19,239
2.5
%
Lapse ratio - 12 months(1)
3.8
%
4.0
%
-0.2 pts
Annuity contracts in force (in
thousands)
228
229
-0.4
%
Retirement Advantage® contracts in force
(in thousands)
16
13
23.1
%
Total Persistency - LTM
94.1
%
94.9
%
-0.8 pts
N.M. - Not meaningful.
(1)
Ordinary life insurance.
HORACE MANN EDUCATORS
CORPORATION
Business Segment Overview
(Unaudited)
($ in millions)
Three Months Ended
June 30,
Six Months Ended
June 30,
2022
2021
Change
2022
2021
Change
Supplemental & Group
Benefits
Net premiums and contract charges
earned
$
69.1
$
32.3
113.9
%
$
139.0
$
64.7
114.8
%
Net investment income
9.6
6.4
50.0
%
16.7
11.8
41.5
%
Other income
(4.8
)
0.6
N.M.
(3.2
)
1.3
N.M.
Benefits, settlement expenses and change
in reserves
26.7
10.1
164.4
%
61.5
20.2
204.5
%
Interest credited
0.2
0.1
100.0
%
0.3
0.1
200.0
%
Operating expenses (includes DAC
unlocking
and amortization expense)
26.5
10.7
147.7
%
52.0
21.7
139.6
%
Intangible asset amortization expense
3.9
3.0
30.0
%
7.8
5.9
32.2
%
Income before income taxes
16.6
15.4
7.8
%
30.9
29.9
3.3
%
Net income
13.2
12.0
10.0
%
24.4
23.3
4.7
%
Core earnings*
13.2
12.0
10.0
%
24.4
23.3
4.7
%
Adjusted core earnings*
16.3
14.3
14.0
%
30.6
28.0
9.3
%
Benefits ratio(1)
38.9
%
31.6
%
7.3 pts
44.5
%
31.4
%
13.1 pts
Operating expense ratio(2)
35.9
%
27.2
%
8.7 pts
34.1
%
27.9
%
6.2 pts
Pretax profit margin(3)
22.5
%
39.2
%
-16.7 pts
20.3
%
38.4
%
-18.1 pts
Voluntary products benefits ratio
34.3
%
31.3
%
3.0 pts
31.8
%
31.1
%
0.7 pts
Voluntary premium persistency (rolling 12
months)
92.0
%
90.7
%
1.3 pts
92.0
%
90.7
%
1.3 pts
Employer-sponsored products benefits
ratio
42.6
%
—
%
N.M.
54.4
%
—
%
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
June 30,
Six Months Ended
June 30,
2022
2021
% Change
2022
2021
% Change
Corporate & Other(1)
Components of loss before tax:
Net investment losses
$
(15.5
)
$
4.9
N.M.
$
(31.0
)
$
(4.1
)
N.M.
Interest expense
(4.3
)
(3.5
)
-22.9
%
(8.2
)
(6.9
)
-18.8
%
Other operating expenses, net investment
income and other income
(2.5
)
(2.8
)
10.7
%
(4.5
)
(4.7
)
4.3
%
Loss before income taxes
(22.3
)
(1.4
)
N.M.
(43.7
)
(15.7
)
N.M.
Net loss
(17.6
)
(1.1
)
N.M.
(34.6
)
(12.4
)
N.M.
Core loss*
(5.4
)
(5.0
)
-8.0
%
(10.2
)
(9.2
)
-10.9
%
Investments
Life & Retirement
Fixed maturity securities, at fair value
(amortized
cost, net 2022, $4,666.2; 2021,
$4,687.1)
$
4,389.3
$
5,087.3
-13.7
%
Equity securities, at fair value
91.0
106.3
-14.4
%
Short-term investments
38.1
77.1
-50.6
%
Policy loans
139.9
144.6
-3.3
%
Limited partnership interests
587.7
383.0
53.4
%
Other investments
56.1
57.9
-3.1
%
Total Life & Retirement
investments
5,302.1
5,856.2
-9.5
%
Property & Casualty
Fixed maturity securities, at fair value
(amortized
cost, net 2022, $612.5; 2021, $775.5)
587.7
847.5
-30.7
%
Equity securities, at fair value
18.0
31.1
-42.1
%
Short-term investments
0.8
1.4
-42.9
%
Limited partnership interests
184.5
164.8
12.0
%
Other investments
1.1
1.1
—
%
Total Property & Casualty
investments
792.1
1,045.9
-24.3
%
Supplemental & Group Benefits
Fixed maturity securities, at fair value
(amortized
cost, net 2022, $767.8; 2021, $586.8)
711.0
620.2
14.6
%
Equity securities, at fair value
7.3
7.3
—
%
Short-term investments
47.2
7.7
N.M.
Policy loans
0.9
0.9
—
%
Limited partnership interests
56.2
37.9
48.3
%
Other investments
7.5
3.1
141.9
%
Total Supplemental & Group Benefits
investments
830.1
677.1
22.6
%
Corporate & Other
Equity securities, at fair value
1.0
1.0
—
%
Short-term investments
11.1
2.2
404.5
%
Total Corporate & Other
investments
12.1
3.2
278.1
%
Total investments
$
6,936.4
$
7,582.4
-8.5
%
Net investment income - investment
portfolio
Before tax
$
79.4
$
84.1
-5.6
%
$
152.4
$
155.2
-1.8
%
After tax
63.1
67.0
-5.8
%
121.2
123.6
-1.9
%
Investment income - deposit asset on
reinsurance
Before tax
$
25.8
25.1
2.8
%
$
50.7
49.5
2.4
%
After tax
20.4
19.8
3.0
%
40.1
39.1
2.6
%
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/20220804005921/en/
Heather J. Wietzel, Vice President, Investor Relations
217-788-5144 | investorrelations@horacemann.com
Horace Mann Educators (NYSE:HMN)
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