- Net income and core earnings per share both rose more than 50%,
in line with earlier announcement
- Unwavering commitment to education market and multi-year
emphasis on products, distribution and infrastructure setting stage
for success in post-vaccine environment
- Sales momentum building in anticipation of back to school, net
annuity contract deposits* lead progress with 16% increase
- Net investment income rose $29 million or 36% on strong returns
from alternatives portfolio, contributing to 10% increase in total
revenues
- Book value per share up 10% and book value excluding net
unrealized gains* up 9% from a year ago
- Reaffirming updated 2021 core EPS guidance of $3.50 to $3.70,
with ROE above 10%
- Planned 2022 acquisition of Madison National will add new suite
of employer-sponsored benefit products and new independent benefit
broker distribution to K-12 school districts
- Expecting 2022 EPS accretion from transaction to be in
mid-single digits with approximately 50 basis point contribution to
ROE
- Growing market share supports progress toward long-term
objective of sustainable double-digit ROE
Horace Mann Educators Corporation (NYSE:HMN) today reported
financial results for the three months ended June 30, 2021:
($ in millions, except per share
amounts)
Three Months Ended
June 30,
Six Months Ended
June 30,
2021
2020
% Change
2021
2020
% Change
Total revenues
$
347.1
$
314.9
10.2
%
$
669.1
$
622.2
7.5
%
Net income
46.7
30.5
53.1
%
86.0
49.0
75.5
%
Net investment gains (losses) after
tax
3.9
2.5
N.M.
(3.2
)
(12.0
)
N.M.
Core earnings*
42.8
28.0
52.9
%
89.2
61.0
46.2
%
Per diluted share:
Net income
1.11
0.73
52.1
%
2.04
1.17
74.4
%
Net investment gains (losses) after
tax
0.09
0.06
N.M.
(0.08
)
(0.28
)
N.M.
Core earnings per diluted share*
1.02
0.67
52.2
%
2.12
1.45
46.2
%
Book value per share
43.78
39.69
10.3
%
Book value per share excluding net
unrealized
investment gains on fixed maturity
securities*
35.78
32.93
8.7
%
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.
“Our record results through the first half of 2021 are
indicative of Horace Mann’s financial strength and the stability of
our multiline insurance and financial services model,” said Horace
Mann President and CEO Marita Zuraitis. "We are ideally positioned
to reach educators returning to a ‘more normal’ in-person teaching
environment this fall. Our agency force is ready with solutions
designed to help educators achieve lifelong financial success
through both our traditional in-person back-to-school marketing
activities, as well as virtual sales tools that were tested and
proven over the past year. We are already seeing more educators
focusing on their long-term financial security, as evidenced
through our 15.6% increase in annuity contract deposits.
“As we announced last month, we now expect full-year 2021 core
EPS in the range of $3.50 to $3.70, with return on equity over
10%,” Zuraitis continued. “Second quarter results benefited from
stronger-than-anticipated net investment income returns and
lower-than-guided catastrophe losses. At a segment level, our
full-year outlook for the Property & Casualty, Retirement, and
Supplemental segments are more positive than at the beginning of
the year. Our Life segment is slightly below original expectations
due to mortality costs in the first quarter that returned to
actuarially expected ranges in the second quarter.
“Strong 2021 results will represent another step toward our
long-term objective of a sustainable double-digit return on
equity,” Zuraitis added. “Looking further ahead, our acquisition of
Madison National Life Insurance Company will add a new suite of
employer-sponsored benefit products and new independent benefit
broker distribution upon our expected close in early 2022. Adding
this complementary distribution channel will enable Horace Mann to
serve every employee in a district with employer-sponsored
solutions designed to help districts attract and retain good
educators. Whether educators get protection through individual
coverage or through their employer, Horace Mann will be able to
provide it.
“We continue to build a track record of prudently allocating
capital to maximize value for our shareholders,” concluded
Zuraitis. “Similar to our 2019 acquisition of NTA, the acquisition
of Madison National will be immediately accretive to EPS and ROE,
and immediately contribute to a larger share of the education
market. It also accelerates our progress on all fronts of our
multi-year strategic plan: strengthening our product offerings,
enhancing our distribution, and adding capabilities to our
infrastructure.”
Property and Casualty segment benefits from strong net
investment income
(All comparisons vs. same period in 2020, unless noted
otherwise)
The Property and Casualty insurance segment primarily markets
private passenger automobile insurance and residential home
insurance. Horace Mann offers standard automobile coverages,
including liability, collision and comprehensive. Property coverage
includes both homeowners and renters policies. For both automobile
and property coverage, Horace Mann offers educators a discounted
rate and the Educator Advantage® package of features. The Property
and Casualty segment represented 53% of 2020 total revenues and
contributed $76.5 million to 2020 core earnings.
($ in millions)
Three Months Ended
June 30,
Six Months Ended
June 30,
2021
2020
Change
2021
2020
Change
Property and Casualty premiums
written*
$
155.6
$
156.1
-0.3
%
$
297.4
$
309.7
-4.0
%
Property and Casualty net income / core
earnings*
19.3
11.3
70.8
%
47.2
37.9
24.5
%
Property and Casualty combined ratio
99.2
%
95.4
%
3.8
pts
92.7
%
92.0
%
0.7
pts
Property and Casualty underlying loss
ratio*
64.9
%
47.6
%
17.3
pts
59.5
%
53.0
%
6.5
pts
Property and Casualty expense ratio
25.7
%
26.2
%
-0.5
pts
25.5
%
26.1
%
-0.6
pts
Property and Casualty catastrophe
losses
11.3
%
22.2
%
-10.9
pts
9.1
%
13.5
%
-4.4
pts
Property and Casualty underlying combined
ratio*
90.6
%
73.8
%
16.8
pts
85.0
%
79.1
%
5.9
pts
Auto combined ratio
93.3
%
80.3
%
13.0
pts
88.7
%
86.3
%
2.4
pts
Auto underlying loss ratio*
68.0
%
50.1
%
17.9
pts
63.3
%
58.8
%
4.5
pts
Property combined ratio
110.8
%
123.9
%
-13.1
pts
100.5
%
103.3
%
-2.8
pts
Property underlying loss ratio*
59.2
%
43.0
%
16.2
pts
51.5
%
41.9
%
9.6
pts
Property and Casualty premiums written of $155.6 million were
flat with last year’s second quarter with new business volume
remaining below historical levels as we work through the impact of
the pandemic on sales. Auto average premiums were down slightly,
driven in part by changes in miles driven. Property average
premiums rose slightly, but with inflationary pressure continuing,
adjustments to coverage values and rate are expected to play a
greater role in the coming quarters. The auto policy retention rate
remained strong and consistent with the prior year while the
property retention rate remained in line with recent
experience.
Overall, segment core earnings for the quarter rose 70.8%, due
to the 244.4% increase in net investment income. The 3.8 point
increase in the combined ratio reflected substantially lower
catastrophe losses offset by a 16.8 point increase in the
underlying combined ratio versus last year’s second quarter. The
underlying auto loss ratio rose to 68.0%, reflecting both the
anticipated increase in frequency as driving behaviors return to
normal as well as higher severity due to inflationary pressure that
are driving loss costs higher than 2020. Due in part to continued
underwriting discipline, the underlying auto loss ratio remains
below 2019 levels. The underlying property loss ratio rose to 59.2%
for the quarter, driven primarily by increased frequency and
severity of fire and non-weather water losses as well as overall
inflation due to the cost of labor and materials.
In the second quarter, policyholders’ losses from 17 catastrophe
events were $17.5 million, adding 11.3 points to the combined ratio
compared to $34.7 million or 22.2 points in last year’s second
quarter. The company’s updated full-year 2021 guidance assumes
second-half catastrophe losses will contribute between $20 million
and $25 million, in line with the 10-year average for second-half
catastrophe losses.
Supplemental segment contributed $12.0 million to
second-quarter earnings
(All comparisons vs. same period in 2020, unless noted
otherwise)
The Supplemental insurance segment specializes in marketing
supplemental insurance products, including cancer, heart, hospital,
supplemental disability and accident for the education market. The
segment represented 12% of 2020 total revenues and contributed
$43.1 million to 2020 core earnings.
($ in millions)
Three Months Ended
June 30,
Six Months Ended
June 30,
2021
2020
Change
2021
2020
Change
Sales*
$
1.2
$
0.7
71.4
%
$
2.2
$
4.4
-50.0
%
Premiums earned
31.6
33.3
-5.1
%
63.3
66.3
-4.5
%
Supplemental net income / core
earnings*
12.0
9.5
26.3
%
23.4
20.0
17.0
%
Pretax profit margin(1)
40.0
%
31.9
%
8.1
pts
39.4
%
34.0
%
5.4
pts
(1)
Measured to total revenues.
Supplemental segment sales were $1.2 million in the second
quarter, which improved over the 2021 first quarter as well as last
year’s second quarter, but continued to reflect limited school
access because of the COVID-19 pandemic. Sales growth is expected
to accelerate through the second half of the year with the
anticipated return to in-person learning this fall. Persistency
remained very strong at 90.7%.
Strong core earnings reflected higher net investment income as
well as favorable business trends including some continued
short-term benefit from changes in policyholder behavior due to
COVID-19. Segment expenses include the non-cash impact of
amortization of intangible assets under purchase accounting that
reduced core earnings by $3.0 million pretax. The pretax profit
margin remains above management’s longer-term expectations because
of the pandemic-related changes in policyholder behavior.
Retirement segment benefits from strong net investment
spread
(All comparisons vs. same period in 2020, unless noted
otherwise)
The Retirement segment primarily markets 403(b) tax-qualified
fixed, fixed index 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. 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 written premium on a statutory accounting
basis. The Retirement segment represented 21% of 2020 total
revenues and contributed $28.2 million to 2020 core earnings.
($ in millions)
Three Months Ended
June 30,
Six Months Ended
June 30,
2021
2020
Change
2021
2020
Change
Net annuity contract deposits*
$
117.4
$
101.6
15.6
%
$
223.2
$
207.4
7.6
%
Annuity assets under management(1)
5,173.1
4,324.3
19.6
%
Total assets under administration(2)
9,319.4
7,952.8
17.2
%
Retirement net income / core earnings*
11.5
9.7
18.6
%
22.1
8.8
151.1
%
Retirement core earnings excluding DAC
unlocking*
11.3
6.0
88.3
%
21.3
8.3
156.6
%
(1)
Amount reported as of June 30, 2021
excludes $818.9 million of assets under management held under
modified coinsurance reinsurance.
(2)
Includes Annuity AUM, Brokerage and
Advisory AUA, and Recordkeeping AUA.
Net annuity contract deposits rose 15.6% over last year’s second
quarter. Horace Mann’s relationships with educators often begins
with our 403(b) retirement savings products, including our
attractive annuity products, and we are encouraged by the
cross-sell opportunities they provide. Total cash value persistency
remained strong at 94.8% for variable annuities and 95.0% for fixed
annuities.
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 17.2% from a
year ago, as assets under management rose largely due to strong
equity market performance over the past 12 months.
The net interest spread was 265 points, reflecting the strong
returns from the alternatives portfolio. Core earnings excluding
DAC unlocking was up 88.3%, primarily due to the strong net
interest margin.
Life segment second-quarter core earnings more than doubled
over prior year
(All comparisons vs. same period in 2020, unless noted
otherwise)
The Life insurance segment primarily markets traditional term
and whole life insurance products to educators. The Life segment
represented 14% of 2020 total revenues and contributed $10.4
million to 2020 core earnings.
($ in millions)
Three Months Ended
June 30,
Six Months Ended
June 30,
2021
2020
Change
2021
2020
Change
Total sales*
$
4.3
$
3.6
19.4
%
$
7.3
$
6.9
5.8
%
Annualized sales*
2.4
2.4
—
%
4.4
4.4
—
%
Life mortality costs
8.5
9.2
-7.6
%
23.1
19.3
19.7
%
Life net income / core earnings*
5.0
1.9
163.2
%
5.7
2.5
128.0
%
Life annualized sales were unchanged from last year on strong
new sales of recurring premium policies and an increase in sales of
single premium policies. Life core earnings for the quarter rose
$3.1 million, reflecting strong net investment income growth and
mortality costs in line with actuarial expectations. Full-year
persistency for life products of 96.0% remains in line with prior
periods.
Investment portfolio sees strong returns from alternatives
portfolio
(All comparisons vs. same period in 2020, unless noted
otherwise)
Horace Mann’s investment strategy is primarily focused on
generating income to support product liabilities, and balances
principal protection and risk. Total net investment income includes
net investment income on the investment portfolio managed by Horace
Mann, as well as accreted investment income on the deposit asset on
reinsurance related to the company’s reinsurance of policy
liabilities related to legacy individual annuities written in 2002
or earlier.
($ in millions)
Three Months Ended
June 30,
Six Months Ended
June 30,
2021
2020
Change
2021
2020
Change
Pretax net investment income - investment
portfolio
$
84.1
$
56.5
48.8
%
$
155.2
$
115.1
34.8
%
Pretax investment income - deposit asset
on
reinsurance
25.1
23.9
5.0
%
49.5
47.6
4.0
%
Total pretax net investment income
109.2
80.4
35.8
%
204.7
162.7
25.8
%
Pretax net investment gains (losses)
4.9
3.2
N.M.
(4.1
)
(15.3
)
N.M.
Pretax net unrealized investment gains on
fixed
maturity securities
505.6
417.6
21.1
%
Investment yield, excluding limited
partnership
interests, pretax - annualized
4.30
%
4.39
%
-0.09
pts
4.25
%
4.45
%
-0.20
pts
N.M. - Not meaningful.
Total net investment income was up 35.8% or $28.8 million. Net
investment income on the managed portfolio rose 48.8%, reflecting
outsized returns in the alternatives portfolio in the second
quarter, primarily benefiting the Property and Casualty segment.
Several private equity funds saw realizations significantly above
expectations during the quarter.
Pretax net investment gains (losses) were $4.9 million, with
immaterial impairments on investments. The company’s fixed maturity
securities portfolio is in a net unrealized investment gain
position of $505.6 million at June 30, 2021.
Book value excluding net unrealized investment gains up 9%
year over year
At June 30, 2021, shareholders’ equity was $1.82 billion, or
$43.78 per share. Excluding net unrealized investment gains on
fixed maturity securities, shareholders’ equity was $1.48 billion,
or $35.78 per share.* At June 30, 2021, total debt was $413.5
million, with $135.0 million outstanding on the company’s line of
credit. The ratio of debt-to-capital excluding net unrealized
investment gains* was 21.8%.
As of June 30, 2021, $19.1 million remained authorized for
future share repurchases under the share repurchase program.
Segment guidance
The company’s current guidance is for 2021 EPS in the range of
$3.50 to $3.70 with core return on equity above 10%. Guidance was
raised on July 1 from $3.00 to $3.20 due to strong second-quarter
net investment income returns and lower-than-guided second-quarter
catastrophe losses. Total 2021 net investment income now is
expected to be in the range of $385 million to $405 million,
largely due to a strong contribution from the alternative
investment portfolio across all segments. In addition to improved
net investment income, the revised full-year 2021 guidance
assumes:
- Property and Casualty 2021 core earnings now expected to be in
the range of $66 million to $70 million. Expected lower catastrophe
losses are offset by an increase in the underlying loss ratio.
- Retirement 2021 core earnings now expected to be in the range
of $43 million to $45 million.
- Life 2021 core earnings now expected to be in the range of $14
million to $16 million as higher first quarter 2021 mortality costs
offset the anticipated increase in full-year net investment
income.
- Supplemental 2021 core earnings now expected to be in the range
of $41 million to $43 million in part due to a better than
anticipated benefits ratio.
Quarterly webcast
Horace Mann’s senior management will discuss the company’s
second-quarter financial results with investors on Aug. 3, 2021 at
8:00 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 providing America’s educators
and school employees with insurance and retirement solutions.
Founded by Educators for Educators® in 1945, the company 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 Quarterly Report on Form 10-Q for the quarterly period
ended March 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,
2021
2020
% Change
2021
2020
% Change
Earnings Summary
Net income
$
46.7
$
30.5
53.1
%
$
86.0
$
49.0
75.5
%
Net investment gains (losses), after
tax
3.9
2.5
N.M.
(3.2
)
(12.0
)
N.M.
Core earnings*
42.8
28.0
52.9
%
89.2
61.0
46.2
%
Per diluted share:
Net income
$
1.11
$
0.73
52.1
%
$
2.04
$
1.17
74.4
%
Net investment gains (losses), after
tax
0.09
0.06
N.M.
(0.08
)
(0.28
)
N.M.
Core earnings*
1.02
0.67
52.2
%
2.12
1.45
46.2
%
Weighted average number of shares and
equivalent shares (in millions) -
Diluted
42.1
42.0
0.2
%
42.1
42.0
0.2
%
Return on Equity
Net income return on equity - LTM(1)
9.8
%
6.9
%
9.8
%
6.9
%
Net income return on equity -
annualized
10.6
%
7.8
%
9.5
%
6.1
%
Core return on equity - LTM*(2)
12.1
%
9.0
%
12.1
%
9.0
%
Core return on equity - annualized*
11.7
%
8.3
%
12.3
%
9.0
%
Financial Position
Per share:(3)
Book value
$
43.78
$
39.69
10.3
%
Effect of net unrealized investment gains
on
fixed maturity securities(4)
$
8.00
$
6.76
18.3
%
Dividends paid
$
0.31
$
0.30
3.3
%
$
0.62
$
0.60
3.3
%
Ending number of shares outstanding (in
millions)(3)
41.5
41.3
0.5
%
Total assets
$
14,190.1
$
12,571.7
12.9
%
Short-term debt
135.0
135.0
—
%
Long-term debt
278.5
302.2
-7.8
%
Total shareholders’ equity
1,816.6
1,639.8
10.8
%
Additional Information
Net investment gains (losses)
Before tax
$
4.9
$
3.2
N.M.
$
(4.1
)
$
(15.3
)
N.M.
After tax
3.9
2.5
N.M.
(3.2
)
(12.0
)
N.M.
Per share, diluted
$
0.09
$
0.06
N.M.
$
(0.08
)
$
(0.28
)
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)
Ending shares outstanding were 41,490,283
at June 30, 2021 and 41,315,424 at June 30, 2020.
(4)
Net of the related impact on deferred
policy acquisition costs and applicable deferred taxes.
HORACE MANN EDUCATORS
CORPORATION
Statements of Operations and
Consolidated Data (Unaudited)
($ in millions)
Three Months Ended
June 30,
Six Months Ended
June 30,
2021
2020
% Change
2021
2020
% Change
Statements of Operations
Premiums and contract charges earned
$
225.8
$
225.4
0.2
%
$
453.4
$
461.7
-1.8
%
Net investment income
109.2
80.4
35.8
%
204.7
162.7
25.8
%
Net investment gains (losses)
4.9
3.2
N.M.
(4.1
)
(15.3
)
N.M.
Other income
7.2
5.9
22.0
%
15.1
13.1
15.3
%
Total revenues
347.1
314.9
10.2
%
669.1
622.2
7.5
%
Benefits, claims and settlement
expenses
147.1
143.0
2.9
%
281.4
281.7
-0.1
%
Interest credited
51.2
50.7
1.0
%
101.8
102.2
-0.4
%
Operating expenses
60.5
55.7
8.6
%
118.5
116.4
1.8
%
DAC unlocking and amortization expense
23.5
20.4
15.2
%
47.6
50.4
-5.6
%
Intangible asset amortization expense
3.2
3.7
-13.5
%
6.5
7.4
-12.2
%
Interest expense
3.5
4.0
-12.5
%
7.0
8.2
-14.6
%
Total benefits, losses and expenses
289.0
277.5
4.1
%
562.8
566.3
-0.6
%
Income before income taxes
58.1
37.4
55.3
%
106.3
55.9
90.2
%
Income tax expense
11.4
6.9
65.2
%
20.3
6.9
194.2
%
Net income
$
46.7
$
30.5
53.1
%
$
86.0
$
49.0
75.5
%
Premiums Written and Contract
Deposits*
Property and Casualty
$
155.6
$
156.1
-0.3
%
$
297.4
$
309.7
-4.0
%
Supplemental
31.7
33.7
-5.9
%
63.3
66.3
-4.5
%
Net annuity contract deposits
117.4
101.6
15.6
%
223.2
207.4
7.6
%
Life
29.5
27.6
6.9
%
54.7
52.4
4.4
%
Total
$
334.2
$
319.0
4.8
%
$
638.6
$
635.8
0.4
%
Segment Net Income (Loss)
Property and Casualty
$
19.3
$
11.3
70.8
%
$
47.2
$
37.9
24.5
%
Supplemental
12.0
9.5
26.3
%
23.4
20.0
17.0
%
Retirement
11.5
9.7
18.6
%
22.1
8.8
151.1
%
Life
5.0
1.9
163.2
%
5.7
2.5
128.0
%
Corporate and Other(1)
(1.1
)
(1.9
)
42.1
%
(12.4
)
(20.2
)
38.6
%
Net income
$
46.7
$
30.5
53.1
%
$
86.0
$
49.0
75.5
%
N.M. - Not meaningful.
(1)
Corporate and 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 12.
HORACE MANN EDUCATORS
CORPORATION
Business Segment Overview
(Unaudited)
($ in millions)
Three Months Ended
June 30,
Six Months Ended
June 30,
2021
2020
Change
2021
2020
Change
Property and Casualty
Premiums written*
$
155.6
$
156.1
-0.3
%
$
297.4
$
309.7
-4.0
%
Premiums earned
155.0
156.2
-0.8
%
310.8
322.7
-3.7
%
Net investment income
21.7
6.3
244.4
%
32.5
16.6
95.8
%
Other income
1.2
0.8
50.0
%
3.3
1.6
106.3
%
Losses and loss adjustment expenses
(LAE)
114.0
108.2
5.4
%
208.7
212.6
-1.8
%
Operating expenses (includes amortization
expense)
39.9
40.9
-2.4
%
79.4
84.1
-5.6
%
Interest expense
—
0.1
-100.0
%
0.1
0.3
-66.7
%
Income before income taxes
24.0
14.1
70.2
%
58.4
43.9
33.0
%
Net income / core earnings*
19.3
11.3
70.8
%
47.2
37.9
24.5
%
Net investment income, after tax
17.7
5.5
221.8
%
26.7
14.2
88.0
%
Catastrophe losses
After tax
13.8
27.4
-49.6
%
22.5
34.4
-34.6
%
Before tax
17.5
34.7
-49.6
%
28.5
43.5
-34.5
%
Prior years’ reserves favorable
development,
before tax
Automobile
3.0
—
N.M.
3.0
1.0
N.M.
Property and other
1.2
1.0
N.M.
1.2
1.0
N.M.
Total
4.2
1.0
N.M.
4.2
2.0
N.M.
Operating statistics:
Loss and loss adjustment expense ratio
73.5
%
69.2
%
4.3
pts
67.2
%
65.9
%
1.3
pts
Expense ratio
25.7
%
26.2
%
-0.5
pts
25.5
%
26.1
%
-0.6
pts
Combined ratio
99.2
%
95.4
%
3.8
pts
92.7
%
92.0
%
0.7
pts
Effect on the combined ratio of:
Catastrophe losses
11.3
%
22.2
%
-10.9
pts
9.1
%
13.5
%
-4.4
pts
Prior years’ favorable reserve
development
-2.7
%
-0.6
%
-2.1
pts
-1.4
%
-0.6
%
-0.8
pts
Combined ratio excluding the effects
of
catastrophe losses and prior years’
reserve
development (underlying combined
ratio)*
90.6
%
73.8
%
16.8
pts
85.0
%
79.1
%
5.9
pts
Risks in force (in thousands)
567
609
-6.9
%
Automobile(1)
387
418
-7.4
%
Property
180
191
-5.8
%
Policy renewal rate - 12 months
Automobile(2)
81.9
%
81.6
%
0.3
pts
Property(2)
87.3
%
87.5
%
-0.2
pts
N.M. - Not meaningful.
(1)
Includes assumed risks in force of 4.
(2)
For the six months ended June 30, 2021,
retention data is an estimate due to system conversion.
HORACE MANN EDUCATORS
CORPORATION
Business Segment Overview
(Unaudited)
($ in millions)
Three Months Ended
June 30,
Six Months Ended
June 30,
2021
2020
Change
2021
2020
Change
Supplemental
Premiums and contract charges earned
$
31.6
$
33.3
-5.1
%
$
63.3
$
66.3
-4.5
%
Net investment income
6.3
4.0
57.5
%
11.6
7.5
54.7
%
Other income
0.6
0.6
—
%
1.3
1.3
—
%
Benefits
8.7
8.7
—
%
18.3
19.4
-5.7
%
Change in reserves
1.2
3.8
-68.4
%
1.3
3.6
-63.9
%
Interest credited
—
—
N.M.
0.1
—
N.M.
Operating expenses (includes DAC unlocking
and
amortization expense)
10.2
10.1
1.0
%
20.6
20.2
2.0
%
Intangible asset amortization expense
3.0
3.2
-6.3
%
5.9
6.4
-7.8
%
Income before income taxes
15.4
12.1
27.3
%
30.0
25.5
17.6
%
Net income / core earnings*
12.0
9.5
26.3
%
23.4
20.0
17.0
%
Benefits ratio(1)
31.3
%
37.5
%
-6.2
pts
31.0
%
34.7
%
-3.7
pts
Operating expense ratio(2)
26.5
%
26.6
%
-0.1
pts
27.0
%
26.9
%
0.1
pts
Pretax profit margin(3)
40.0
%
31.9
%
8.1
pts
39.4
%
34.0
%
5.4
pts
Premium persistency (rolling 12
months)
90.7
%
89.3
%
1.4
pts
90.7
%
89.3
%
1.4
pts
N.M. - Not meaningful.
(1)
Ratio of benefits plus change in reserves
to earned premium.
(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,
2021
2020
Change
2021
2020
Change
Retirement
Net annuity contract deposits
$
117.4
$
101.6
15.6
%
$
223.2
$
207.4
7.6
%
Variable
67.6
52.3
29.3
%
129.2
110.1
17.3
%
Fixed
49.8
49.3
1.0
%
94.0
97.3
-3.4
%
Contract charges earned
9.2
6.7
37.3
%
17.8
14.1
26.2
%
Net investment income
36.9
31.2
18.3
%
72.9
61.0
19.5
%
Interest credited
14.1
14.5
-2.8
%
27.9
30.2
-7.6
%
Net interest margin
22.8
16.7
36.5
%
45.0
30.8
46.1
%
Investment income - deposit asset on
reinsurance
25.1
23.9
5.0
%
49.5
47.6
4.0
%
Interest credited - Reinsured block
25.9
24.9
4.0
%
51.4
49.5
3.8
%
Net interest margin - Reinsured block
(0.8
)
(1.0
)
20.0
%
(1.9
)
(1.9
)
—
%
Other income
4.9
4.1
19.5
%
9.6
9.4
2.1
%
Mortality loss and other reserve
changes
(1.6
)
(1.2
)
-33.3
%
(2.7
)
(2.8
)
3.6
%
Operating expenses (includes DAC unlocking
and
amortization expense)
20.3
13.6
49.3
%
40.6
38.5
5.5
%
Intangible asset amortization expense
0.3
0.5
-40.0
%
0.7
1.0
-30.0
%
Income before income taxes
13.9
11.2
24.1
%
26.5
10.1
162.4
%
Net income / core earnings*
11.5
9.7
18.6
%
22.1
8.8
151.1
%
Pretax income increase (decrease) due
to
evaluation of:
Deferred policy acquisition costs
$
0.2
$
4.6
-95.7
%
$
1.0
$
0.6
66.7
%
Guaranteed minimum death benefit
reserve
—
0.2
-100.0
%
—
(0.1
)
100.0
%
Retirement contracts in force (in
thousands)
229
230
-0.4
%
Annuity accumulated account value on
deposit /
Assets under management
$
5,173.1
$
4,324.3
19.6
%
Variable(1)
2,437.8
1,689.3
44.3
%
Fixed
2,735.3
2,635.0
3.8
%
Annuity accumulated value retention - 12
months
Variable accumulations
94.8
%
94.9
%
-0.1
pts
Fixed accumulations
95.0
%
94.2
%
0.8
pts
Life
Premiums written and contract
deposits*
$
29.5
$
27.6
6.9
%
$
54.7
$
52.4
4.4
%
Premiums and contract charges earned
30.0
29.2
2.7
%
61.5
58.6
4.9
%
Net investment income
19.8
15.6
26.9
%
39.4
31.2
26.3
%
Other income
0.1
—
N.M.
0.2
—
N.M.
Death benefits/mortality cost/change in
reserves
21.6
21.1
2.4
%
50.4
43.3
16.4
%
Interest credited
11.2
11.3
-0.9
%
22.4
22.5
-0.4
%
Operating expenses (includes DAC unlocking
and
amortization expense)
11.0
10.1
8.9
%
21.3
21.0
1.4
%
Income before income taxes
6.1
2.3
165.2
%
7.0
3.0
133.3
%
Net income / core earnings*
5.0
1.9
163.2
%
5.7
2.5
128.0
%
Pretax income increase (decrease) due
to
evaluation of:
Deferred policy acquisition costs
$
0.1
$
0.2
-50.0
%
$
—
$
0.3
-100.0
%
Life policies in force (in thousands)
200
201
-0.5
%
Life insurance in force
$
20,122
$
19,565
2.8
%
Lapse ratio - 12 months (Ordinary life
insurance)
4.0
%
4.2
%
-0.2
pts
N.M. - Not meaningful.
(1)
Amount reported as of June 30, 2021
excludes $818.9 of assets under management held under modified
coinsurance reinsurance.
HORACE MANN EDUCATORS
CORPORATION
Business Segment Overview
(Unaudited)
($ in millions)
Three Months Ended
June 30,
Six Months Ended
June 30,
2021
2020
% Change
2021
2020
% Change
Corporate and Other(1)
Components of loss before tax:
Net investment gains (losses)
$
4.9
$
3.2
N.M.
$
(4.1
)
$
(15.3
)
N.M.
Interest expense
(3.5
)
(3.9
)
10.3
%
(6.9
)
(7.9
)
12.7
%
Other operating expenses, net investment
income
and other income
(2.8
)
(1.6
)
-75.0
%
(4.7
)
(3.4
)
-38.2
%
Loss before income taxes
(1.4
)
(2.3
)
39.1
%
(15.7
)
(26.6
)
41.0
%
Net loss
(1.1
)
(1.9
)
42.1
%
(12.4
)
(20.2
)
38.6
%
Investments
Retirement and Life
Fixed maturity securities, at fair value
(amortized
cost, net 2021, $4,687.1; 2020,
$4,251.5)
$
5,087.3
$
4,579.9
11.1
%
Equity securities, at fair value
106.3
79.2
34.2
%
Short-term investments
77.1
157.6
-51.1
%
Policy loans
144.6
151.4
-4.5
%
Limited partnership interests
383.0
257.9
48.5
%
Other investments
57.9
37.1
56.1
%
Total Retirement and Life investments
5,856.2
5,263.1
11.3
%
Property and Casualty
Fixed maturity securities, at fair value
(amortized
cost, net 2021, $775.5; 2020, $808.0)
847.5
867.5
-2.3
%
Equity securities, at fair value
31.1
7.5
314.7
%
Short-term investments
1.4
14.4
-90.3
%
Limited partnership interests
164.8
115.0
43.3
%
Other investments
1.1
1.1
—
%
Total Property and Casualty
investments
1,045.9
1,005.5
4.0
%
Supplemental
Fixed maturity securities, at fair value
(amortized
cost, net 2021, $586.8; 2020, $544.9)
620.2
574.6
7.9
%
Equity securities, at fair value
7.3
3.6
102.8
%
Short-term investments
7.7
11.7
-34.2
%
Policy loans
0.9
0.8
12.5
%
Limited partnership interests
37.9
19.3
96.4
%
Other investments
3.1
1.8
72.2
%
Total Supplemental investments
677.1
611.8
10.7
%
Corporate and Other
Equity securities, at fair value
1.0
—
N.M.
Short-term investments
7.3
0.4
N.M.
Total Corporate and Other investments
8.3
0.4
N.M.
Total investments
$
7,587.5
$
6,880.8
10.3
%
Net investment income - investment
portfolio
Before tax
$
84.1
$
56.5
48.8
%
$
155.2
$
115.1
34.8
%
After tax
67.0
45.2
48.2
%
123.6
92.0
34.3
%
Investment income - deposit asset on
reinsurance
Before tax
$
25.1
23.9
5.0
%
$
49.5
47.6
4.0
%
After tax
19.8
18.9
4.8
%
39.1
37.6
4.0
%
N.M. - Not meaningful.
(1)
The Corporate and 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/20210802005708/en/
Heather J. Wietzel, Vice President, Investor Relations
217-788-5144 | investorrelations@horacemann.com
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