Fourth-quarter 2021 net income of
$0.96 per share and core earnings* of $0.97 per share
- Full-year net income and core earnings per share ahead of prior
year, largely due to 18% increase in net investment income on
strong limited partnership portfolio returns
- Full-year 2021 net income return on equity of 8.0% with core
ROE of 10.3%
- Fourth quarter demonstrated value of multi-year emphasis on
products, distribution and infrastructure to serve education market
- Supplemental fourth-quarter sales highest since onset of
pandemic; Life and Retirement fourth-quarter sales up year over
year
- Fourth-quarter earnings for each segment ahead of expectations
due to strong net investment income despite after-tax catastrophe
losses of $9 million and auto loss ratio returning to pre-pandemic
level
- Book value per share up 1% and book value excluding net
unrealized gains* up 7% from year-end 2020
- Expect 2022 EPS in range of $3.45-$3.65 and ROE near 10%; in
2023 and beyond, targeting 10% average annual EPS growth and
sustained double-digit ROEs
- 2022 guidance includes at least 15 cents from newly acquired
Madison National Life Insurance Company’s current business
activity, as well as initial contributions of the strategic growth
initiatives that drive results in 2023 and beyond
- Guidance continues to reflect catastrophe loss assumption in
line with 10-year average and net investment income contribution
with limited partnership portfolio returns closer to the historical
averages
- Larger, more diverse organization should generate more than $50
million in excess capital each year, available to support growth
and to return to shareholders
Horace Mann Educators Corporation (NYSE:HMN) today reported
financial results for the three months ended December 31, 2021:
($ in millions, except per share
amounts)
Three Months Ended December
31,
Twelve Months Ended December
31,
2021
2020
% Change
2021
2020
% Change
Total revenues
$
331.4
$
352.3
-5.9
%
$
1,330.1
$
1,310.4
1.5
%
Net income
40.5
47.8
-15.3
%
142.8
133.3
7.1
%
Net investment (losses) gains after
tax
(0.3
)
8.4
N.M.
(8.6
)
(1.7
)
N.M.
Other expense - goodwill and intangible
asset impairments, after tax
—
(8.1
)
N.M.
—
(8.1
)
N.M.
Core earnings*
40.8
47.5
-14.1
%
151.4
143.1
5.8
%
Per diluted share:
Net income
0.96
1.13
-15.0
%
3.39
3.17
6.9
%
Net investment (losses) gains after
tax
(0.01
)
0.19
N.M.
(0.20
)
(0.04
)
N.M.
Other expense - goodwill and intangible
asset impairments, after tax
—
(0.19
)
N.M.
—
(0.19
)
N.M.
Core earnings per diluted share*
0.97
1.13
-14.2
%
3.59
3.40
5.6
%
Book value per share
43.66
43.22
1.0
%
Book value per share excluding net
unrealized investment gains on fixed maturity securities*
36.64
34.38
6.6
%
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.
“For the second consecutive year, Horace Mann reported record
core earnings, with core return on equity again above 10%. All our
business areas are showing some encouraging signs of momentum,
although the pace continues to vary by segment and geography
compared to the pre-pandemic environment — partially due to
regional variations in the course of the pandemic and differing
community responses,” said Horace Mann President and CEO Marita
Zuraitis. “We continue to see strong growth in our Retirement line,
with sales up 5% over prior year as educators continue to focus on
their long-term financial success. We have long benefited from
cross-sell opportunities through Retirement relationships in new
districts. And despite the inherent seasonality of fourth-quarter
benefit enrollments, the Supplemental segment posted its strongest
sales quarter since the pandemic began. We are pleased with this
progress and look forward to its acceleration in 2022.
“Our results continue to benefit from our intentional
diversification into limited partnership investments and commercial
mortgage loan funds investments,” Zuraitis continued. “As a result,
net investment income for the year was ahead of our original
guidance by about $33 million, or more than 75 cents per share. The
benefit of the higher net investment income was partially offset by
full-year catastrophe losses above our 10-year average by about $15
million, or approximately 35 cents per share.
“With the addition of Madison National Life on Jan. 1, we
dramatically improved our value proposition for school districts
and educators,” Zuraitis said. “In 2022, we aim to leverage our
expanded product offerings to increase our share of the educator
market. Whether educators are buying insurance and financial
solutions from a local, trusted advisor; through one of our direct
channels; or receiving them through their school district employer,
Horace Mann can be the partner to provide it.
“We expect our acquisition of Madison National and acceleration
of growth through all channels will help us achieve our targeted
2022 core EPS and ROE, as the contribution from our limited
partnerships portfolio is expected to return to our average
historical returns,” Zuraitis said. “We also are assuming
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 to generate more than $50
million in excess capital each year. Going forward, we expect to
continue to prioritize growth in our capital plans. At the same
time, we are committed to maintaining our 13-year track record of
annual increases in our cash dividend and returning capital to
shareholders through repurchases.”
Segment guidance
2022 guidance includes accretion from Madison National’s current
business activity as well as estimates of the initial contributions
of strategic growth initiatives. Full-year net investment income is
estimated to total about $310 million to $320 million, in line with
2021, with limited partnership portfolio returns modeled closer to
the historical averages. Beginning with first quarter 2022, Horace
Mann will report financial results in three operating segments. The
new Life & Retirement segment will combine the current Life and
Retirement segments. The Supplemental & Group Benefits segment
will include the Supplemental business as well as the results of
Madison National Life.
- Property & Casualty segment 2022 core earnings are expected
to be in the range of $44 million to $48 million. In 2022, the
underlying auto loss ratio is expected to be slightly higher than
2021 level as auto frequency remains near pre-pandemic levels, with
inflation driving higher severity in both auto and property lines.
Guidance reflects a catastrophe loss assumption of approximately
9.5 points on the combined ratio, in line with the 10-year average.
The longer-term combined ratio target remains 95-96%. Net
investment income is expected to be lower in this segment, as it
benefited from strong limited partnership returns in 2021.
- Life & Retirement segment 2022 core earnings are expected
to be in the range of $74 million to $77 million. Net investment
income is expected to be up slightly, maintaining the net
investment spread near the 2021 level. Guidance reflects mortality
returning to actuarial expectations.
- Supplemental & Group Benefits segment 2022 core earnings
are expected to be in the range of $47 million to $50 million.
Claims utilization for supplemental and disability products is
expected to be near pre-pandemic levels leading to a benefit ratio
about 35% for voluntary products and about 50% for employer-paid
products. As a result of the Madison National transaction, 2022
total amortization of intangible assets is expected to increase by
8 to 12 cents per share over 2021.
Reported results for 2021, discussed on the following pages, are
based on the current four operating segments.
Property & Casualty segment full-year core earnings of
$57 million with underlying combined ratio at 87.7% (All
comparisons vs. same period in 2020, 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 December
31,
Twelve Months Ended December
31,
2021
2020
Change
2021
2020
Change
Property & Casualty premiums
written*
$
146.6
$
153.0
-4.2
%
$
607.8
$
635.5
-4.4
%
Property & Casualty net income / core
earnings*
14.5
22.8
-36.4
%
57.0
76.5
-25.5
%
Property & Casualty combined ratio
99.9
%
90.2
%
9.7 pts
99.2
%
92.7
%
6.5 pts
Property & Casualty underlying loss
ratio*
64.4
%
58.7
%
5.7 pts
61.0
%
54.9
%
6.1 pts
Property & Casualty expense ratio
28.3
%
28.3
%
— pts
26.7
%
26.4
%
0.3 pts
Property & Casualty catastrophe
losses
7.2
%
3.8
%
3.4 pts
12.7
%
13.0
%
-0.3 pts
Property & Casualty underlying
combined ratio*
92.7
%
87.0
%
5.7 pts
87.7
%
81.3
%
6.4 pts
Auto combined ratio
108.4
%
96.2
%
12.2 pts
96.1
%
88.0
%
8.1 pts
Auto underlying loss ratio*
79.3
%
67.4
%
11.9 pts
69.0
%
60.4
%
8.6 pts
Property combined ratio
84.7
%
79.0
%
5.7 pts
105.4
%
102.0
%
3.4 pts
Property underlying loss ratio*
37.3
%
42.1
%
-4.8 pts
45.9
%
44.3
%
1.6 pts
The Property & Casualty segment was profitable for both the
fourth quarter and full year with stronger net investment income.
Catastrophe loss costs were again above historic averages. Auto
loss costs were higher in both the fourth quarter and full year
largely due to the lower level of loss activity in 2020 periods.
This was the result of frequency returning from the pandemic lows
experienced in 2020 as well as elevated severity in 2021.
In the fourth quarter, policyholder catastrophe losses were
$11.1 million, which added 7.2 points to the company’s combined
ratio, compared to $6.1 million or 3.8 points in last year’s fourth
quarter. The largest event was the Colorado wildfires in late
December, with $5.3 million in policyholder losses.
The full-year auto underlying loss ratio was 69.0%, compared to
the prior year auto underlying loss ratio of 60.4%, as driving
patterns steadily returned to a more normal level and inflation
continued to affect severity. The full-year property underlying
loss ratio rose slightly, also reflecting the effect of
inflation.
Property & Casualty full-year premiums written of $607.8
million were below last year with new business volume remaining
below historical levels due to the continuing impact of the
pandemic on sales. For the full year, auto average premiums were
flat, even as miles driven has begun to rise. Property average
premiums rose as adjustments to coverage values continue to take
effect. Rate increases are expected to play an even greater role in
the coming quarters.
Supplemental segment full-year core earnings of $46 million
with fourth-quarter sales highest since pandemic began (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 11% of 2021 total revenues and contributed
$46.3 million to 2021 core earnings.
($ in millions)
Three Months Ended December
31,
Twelve Months Ended December
31,
2021
2020
Change
2021
2020
Change
Sales*
$
2.2
$
1.4
57.1
%
$
6.4
$
7.2
-11.1
%
Premiums earned
31.0
31.9
-2.8
%
125.3
130.7
-4.1
%
Supplemental net income / core
earnings*
11.5
12.5
-8.0
%
46.3
43.1
7.4
%
Pretax profit margin(1)
38.4
%
41.5
%
-3.1 pts
38.7
%
36.4
%
2.3 pts
(1) Measured to total revenues.
Supplemental segment sales were $2.2 million in the fourth
quarter, a 57.1% increase over last year and the highest quarter
since the start of the pandemic. Persistency remained very strong
at 92.5%.
Strong core earnings for both the quarter and the full year
reflected higher net investment income, as well as favorable
business trends including some continued benefit from short-term
changes in policyholder behavior due to the pandemic. Segment
expenses for the year include the non-cash impact of amortization
of intangible assets under purchase accounting that reduced core
earnings by $11.7 million pretax. Margins remain above management’s
longer-term expectations because of the pandemic-related changes in
policyholder behavior.
Retirement segment full-year core earnings excluding DAC
unlocking of $51 million, benefiting 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 24% of 2021 total
revenues and contributed $52.0 million to 2021 core earnings.
($ in millions)
Three Months Ended December
31,
Twelve Months Ended December
31,
2021
2020
Change
2021
2020
Change
Net annuity contract deposits*
$
104.2
$
103.0
1.2
%
$
448.8
$
429.1
4.6
%
Annuity assets under management(1)
5,339.8
4,841.8
10.3
%
Total assets under administration(2)
9,509.7
8,684.0
9.5
%
Retirement net income
15.8
3.5
351.4
%
52.0
20.1
158.7
%
Retirement core earnings*
15.8
11.6
36.2
%
52.0
28.2
84.4
%
Retirement core earnings excluding DAC
unlocking*
16.2
11.2
44.6
%
51.0
26.8
90.3
%
(1)
Amount reported as of December 31, 2021
excludes $834.6 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 4.6% for the full year.
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
94.4% for the fixed and variable annuities.
Horace Mann currently has $5.3 billion in annuity assets under
management, including $2.2 billion of fixed annuities, $2.6 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 9.5% from a
year ago, as assets under management continued to rise due to
strong equity market performance over the past 12 months.
The net interest spread improved again in the fourth quarter to
290 points for the full year, reflecting the strong returns from
the limited partnership portfolio. Core earnings excluding DAC
unlocking was up 90.3% for the year, primarily due to the strong
net interest margin.
Life segment full-year core earnings were $16 million
(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 2021 total revenues and contributed $16.1
million to 2021 core earnings.
($ in millions)
Three Months Ended December
31,
Twelve Months Ended December
31,
2021
2020
Change
2021
2020
Change
Total sales*
$
3.1
$
3.1
—
%
$
13.9
$
12.7
9.4
%
Annualized sales*
2.3
2.1
9.5
%
8.7
8.5
2.4
%
Life mortality costs
10.1
10.5
-3.8
%
43.5
38.8
12.1
%
Life net income / core earnings*
5.3
3.6
47.2
%
16.1
10.4
54.8
%
Life annualized sales were up 2.4% over last year, with
fourth-quarter sales up 9.5% on continued sales of recurring
premium policies. Life core earnings for the year rose 54.8%,
reflecting strong net investment income growth offset by higher
mortality costs. Full-year persistency for life products of 96.5%
remains in line with prior periods.
Investment portfolio sees strong returns from limited
partnership 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 December
31,
Twelve Months Ended December
31,
2021
2020
Change
2021
2020
Change
Pretax net investment income - investment
portfolio
$
88.1
$
76.0
15.9
%
$
321.4
$
260.3
23.5
%
Pretax investment income - deposit asset
on reinsurance
26.0
25.2
3.2
%
101.1
97.3
3.9
%
Total pretax net investment income
114.1
101.2
12.7
%
422.5
357.6
18.1
%
Pretax net investment (losses) gains
(0.4
)
10.5
N.M.
(11.0
)
(2.3
)
N.M.
Pretax net unrealized investment gains on
fixed maturity securities
441.6
556.7
-20.7
%
Investment yield on fixed income
portfolio, pretax - annualized
4.27
%
4.20
%
0.07 pts
4.25
%
4.23
%
0.02 pts
N.M. - Not meaningful.
Total net investment income was up 18.1% or $64.9 million for
the year. Net investment income on the managed portfolio rose
23.5%, reflecting strong returns on the limited partnership
portfolio throughout the year, largely due to private equity and
venture capital investments. The company’s fixed maturity
securities portfolio is in a net unrealized investment gain
position of $441.6 million pretax at December 31, 2021.
Book value excluding net unrealized investment gains up 7%
year over year
At December 31, 2021, shareholders’ equity was $1.81 billion, or
$43.66 per share. Excluding net unrealized investment gains on
fixed maturity securities, shareholders’ equity was $1.52 billion,
or $36.64 per share.* During the fourth quarter, Horace Mann
repurchased 96,073 shares of common stock at an average price of
$37.14. As of December 31, 2021, $15.3 million remained authorized
for future share repurchases under the share repurchase
program.
The company closed the acquisition of Madison National Life, a
provider of group life, disability and specialty health insurance
for educators and public sector employees, on Jan. 1, 2022. The
transaction was funded with cash on hand and additional borrowings
on the company’s revolving credit facility made in late 2021.
As a result, at December 31, 2021, total debt was $502.6
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 year-end 2021, which aligns with
levels appropriate for the company’s current financial strength
ratings.
Investor webcast
Horace Mann’s senior management will discuss the company’s
fourth-quarter and full-year financial results with investors on
Feb. 2, 2022 at 10:00 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 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 life insurance and financial
solutions tailored to the needs of the educator community. 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 September 30, 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 December
31,
Twelve Months Ended December
31,
2021
2020
% Change
2021
2020
% Change
Earnings Summary
Net income
$
40.5
$
47.8
-15.3
%
$
142.8
$
133.3
7.1
%
Net investment (losses) gains, after
tax
(0.3
)
8.4
N.M.
(8.6
)
(1.7
)
N.M.
Other expense - goodwill and intangible
asset impairments, after tax
—
(8.1
)
N.M.
—
(8.1
)
N.M.
Core earnings*
40.8
47.5
-14.1
%
151.4
143.1
5.8
%
Per diluted share:
Net income
$
0.96
$
1.13
-15.0
%
$
3.39
$
3.17
6.9
%
Net investment (losses) gains, after
tax
(0.01
)
0.19
N.M.
(0.20
)
(0.04
)
N.M.
Other expense - goodwill and intangible
asset impairments, after tax
—
(0.19
)
N.M.
—
(0.19
)
N.M.
Core earnings*
0.97
1.13
-14.2
%
3.59
3.40
5.6
%
Weighted average number of shares and
equivalent shares (in millions) - Diluted
42.2
42.2
—
%
42.2
42.0
0.5
%
Return on Equity
Net income return on equity - LTM(1)
8.0
%
8.1
%
8.0
%
8.1
%
Net income return on equity -
annualized
9.0
%
10.9
%
Core return on equity - LTM*(2)
10.3
%
10.5
%
10.3
%
10.5
%
Core return on equity - annualized*
10.9
%
13.5
%
Financial Position
Per share:(3)
Book value
$
43.66
$
43.22
1.0
%
Effect of net unrealized investment gains
on fixed maturity securities(4)
$
7.02
$
8.84
-20.6
%
Dividends paid
$
0.31
$
0.30
3.3
%
$
1.24
$
1.20
3.3
%
Ending number of shares outstanding (in
millions)(3)
41.4
41.4
—
%
Total assets
$
14,383.9
$
13,471.8
6.8
%
Short-term debt
249.0
135.0
84.4
%
Long-term debt
253.6
302.3
-16.1
%
Total shareholders’ equity
1,807.4
1,790.1
1.0
%
Additional Information
Net investment (losses) gains
Before tax
$
(0.4
)
$
10.5
N.M.
$
(11.0
)
$
(2.3
)
N.M.
After tax
(0.3
)
8.4
N.M.
(8.6
)
(1.7
)
N.M.
Per share, diluted
$
(0.01
)
$
0.19
N.M.
$
(0.20
)
$
(0.04
)
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 41,393,484
at December 31, 2021 and 41,414,218 at December 31, 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 December
31,
Twelve Months Ended December
31,
2021
2020
% Change
2021
2020
% Change
Statements of Operations
Premiums and contract charges earned
$
210.8
$
233.7
-9.8
%
$
889.6
$
930.7
-4.4
%
Net investment income
114.1
101.2
12.7
%
422.5
357.6
18.1
%
Net investment (losses) gains
(0.4
)
10.5
N.M.
(11.0
)
(2.3
)
N.M.
Other income
6.9
6.9
—
%
29.0
24.4
18.9
%
Total revenues
331.4
352.3
-5.9
%
1,330.1
1,310.4
1.5
%
Benefits, claims and settlement
expenses
182.2
187.1
-2.6
%
782.1
773.5
1.1
%
Operating expenses
68.7
64.7
6.2
%
251.5
237.8
5.8
%
DAC unlocking and amortization expense
24.2
24.9
-2.8
%
94.7
99.9
-5.2
%
Intangible asset amortization expense
3.2
3.5
-8.6
%
13.0
14.4
-9.7
%
Interest expense
3.5
3.5
—
%
13.9
15.2
-8.6
%
Other expense - goodwill and intangible
asset impairments
—
10.0
N.M.
—
10.0
N.M.
Total benefits, losses and expenses
281.8
293.7
-4.1
%
1,155.2
1,150.8
0.4
%
Income before income taxes
49.6
58.6
-15.4
%
174.9
159.6
9.6
%
Income tax expense
9.1
10.8
-15.7
%
32.1
26.3
22.1
%
Net income
$
40.5
$
47.8
-15.3
%
$
142.8
$
133.3
7.1
%
Premiums Written and Contract
Deposits*
Property & Casualty
$
146.6
$
153.0
-4.2
%
$
607.8
$
635.5
-4.4
%
Supplemental
31.1
32.0
-2.8
%
125.3
130.3
-3.8
%
Net annuity contract deposits
104.2
103.0
1.2
%
448.8
429.1
4.6
%
Life
32.1
30.8
4.2
%
116.9
110.1
6.2
%
Total
$
314.0
$
318.8
-1.5
%
$
1,298.8
$
1,305.0
-0.5
%
Segment Net Income (Loss)
Property & Casualty
$
14.5
$
22.8
-36.4
%
$
57.0
$
76.5
-25.5
%
Supplemental
11.5
12.5
-8.0
%
46.3
43.1
7.4
%
Retirement
15.8
3.5
351.4
%
52.0
20.1
158.7
%
Life
5.3
3.6
47.2
%
16.1
10.4
54.8
%
Corporate & Other(1)
(6.6
)
5.4
N.M.
(28.6
)
(16.8
)
-70.2
%
Net income
$
40.5
$
47.8
-15.3
%
$
142.8
$
133.3
7.1
%
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 12.
HORACE MANN EDUCATORS
CORPORATION
Business Segment Overview
(Unaudited)
($ in millions)
Three Months Ended December
31,
Twelve Months Ended December
31,
2021
2020
Change
2021
2020
Change
Property & Casualty
Premiums written*
$
146.6
$
153.0
-4.2
%
$
607.8
$
635.5
-4.4
%
Premiums earned
153.3
161.4
-5.0
%
617.4
650.1
-5.0
%
Net investment income
17.3
12.3
40.7
%
61.1
42.6
43.4
%
Other income
0.5
0.2
150.0
%
4.5
2.3
95.7
%
Losses and loss adjustment expenses
(LAE)
109.7
100.0
9.7
%
447.9
431.0
3.9
%
Operating expenses (includes amortization
expense)
43.3
45.7
-5.3
%
164.8
171.7
-4.0
%
Interest expense
—
—
N.M.
0.1
0.4
-75.0
%
Income before income taxes
18.1
28.2
-35.8
%
70.2
91.9
-23.6
%
Net income / core earnings*
14.5
22.8
-36.4
%
57.0
76.5
-25.5
%
Net investment income, after tax
14.1
10.2
38.2
%
50.2
35.7
40.6
%
Catastrophe losses
After tax
8.8
4.8
83.3
%
61.8
66.7
-7.3
%
Before tax
11.1
6.1
82.0
%
78.2
84.4
-7.3
%
Prior years’ reserve development, before
tax(1)
Auto
—
—
N.M.
(5.0
)
(2.0
)
150.0
%
Property and other
—
(1.0
)
N.M.
(2.2
)
(8.2
)
-73.2
%
Total
—
(1.0
)
N.M.
(7.2
)
(10.2
)
-29.4
%
Operating statistics:
Loss and loss adjustment expense ratio
71.6
%
61.9
%
9.7 pts
72.5
%
66.3
%
6.2 pts
Expense ratio
28.3
%
28.3
%
— pts
26.7
%
26.4
%
0.3 pts
Combined ratio
99.9
%
90.2
%
9.7 pts
99.2
%
92.7
%
6.5 pts
Effect on the combined ratio of:
Catastrophe losses
7.2
%
3.8
%
3.4 pts
12.7
%
13.0
%
-0.3 pts
Prior years’ reserve development(1)
—
%
-0.6
%
0.6 pts
-1.2
%
-1.6
%
0.4 pts
Combined ratio excluding the effects
of
catastrophe losses and prior years’
reserve
development (underlying combined
ratio)*
92.7
%
87.0
%
5.7 pts
87.7
%
81.3
%
6.4 pts
Risks in force (in thousands)
553
583
-5.1
%
Auto(2)
376
399
-5.8
%
Property
177
184
-3.8
%
Policy renewal rate - 12 months
Auto(3)
83.7
%
81.2
%
2.5 pts
Property(3)
88.3
%
86.8
%
1.5 pts
N.M. - Not meaningful.
(1)
(Favorable) unfavorable.
(2)
Includes assumed risks in force of 4.
(3)
For the twelve months ended December 31,
2021, retention data is an estimate due to system conversion.
HORACE MANN EDUCATORS
CORPORATION
Business Segment Overview
(Unaudited)
($ in millions)
Three Months Ended December
31,
Twelve Months Ended December
31,
2021
2020
Change
2021
2020
Change
Supplemental
Premiums and contract charges earned
$
31.0
$
31.9
-2.8
%
$
125.3
$
130.7
-4.1
%
Net investment income
6.1
6.0
1.7
%
24.8
17.8
39.3
%
Other income
0.7
0.7
—
%
2.5
2.7
-7.4
%
Benefits
9.8
9.4
4.3
%
40.0
43.1
-7.2
%
Operating expenses (includes DAC unlocking
and
amortization expense)
10.6
10.1
5.0
%
41.9
40.4
3.7
%
Intangible asset amortization expense
2.9
3.1
-6.5
%
11.7
12.6
-7.1
%
Income before income taxes
14.5
16.0
-9.4
%
59.0
55.1
7.1
%
Net income / core earnings*
11.5
12.5
-8.0
%
46.3
43.1
7.4
%
Benefits ratio(1)
31.6
%
29.5
%
2.1 pts
31.9
%
33.0
%
-1.1 pts
Operating expense ratio(2)
28.0
%
26.2
%
1.8 pts
27.5
%
26.7
%
0.8 pts
Pretax profit margin(3)
38.4
%
41.5
%
-3.1 pts
38.7
%
36.4
%
2.3 pts
Premium persistency (rolling 12
months)
92.5
%
90.5
%
2.0 pts
92.5
%
90.5
%
2.0 pts
N.M. - Not meaningful.
(1)
Ratio of benefits 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 December
31,
Twelve Months Ended December
31,
2021
2020
Change
2021
2020
Change
Retirement
Net annuity contract deposits
$
104.2
$
103.0
1.2
%
$
448.8
$
429.1
4.6
%
Variable
66.3
57.6
15.1
%
266.5
226.2
17.8
%
Fixed
37.9
45.4
-16.5
%
182.3
202.9
-10.2
%
Contract charges earned
10.8
8.2
31.7
%
38.5
29.7
29.6
%
Net investment income
42.7
37.9
12.7
%
154.8
132.5
16.8
%
Interest credited
14.1
14.2
-0.7
%
56.2
58.6
-4.1
%
Net interest margin
28.6
23.7
20.7
%
98.6
73.9
33.4
%
Investment income - deposit asset on
reinsurance
26.0
25.2
3.2
%
101.1
97.3
3.9
%
Interest credited - Reinsured block
26.7
25.9
3.1
%
104.6
100.9
3.7
%
Net interest margin - Reinsured block
(0.7
)
(0.7
)
—
%
(3.5
)
(3.6
)
2.8
%
Other income
5.1
4.2
21.4
%
19.8
16.3
21.5
%
Mortality loss and other reserve
changes
(1.9
)
(1.2
)
-58.3
%
(5.5
)
(5.3
)
-3.8
%
Operating expenses (includes DAC unlocking
and
amortization expense)
23.1
20.6
12.1
%
84.7
77.0
10.0
%
Intangible asset amortization expense
0.3
0.4
-25.0
%
1.3
1.8
-27.8
%
Other expense - goodwill and intangible
asset impairments
—
10.0
N.M.
—
10.0
N.M.
Income before income taxes
18.5
3.2
478.1
%
61.9
22.2
178.8
%
Net income
15.8
3.5
351.4
%
52.0
20.1
158.7
%
Core earnings*
15.8
11.6
36.2
%
52.0
28.2
84.4
%
Pretax income increase (decrease) due
to
evaluation of:
Deferred policy acquisition costs
$
(0.5
)
$
0.5
N.M.
$
1.3
$
1.8
-27.8
%
Guaranteed minimum death benefit
reserve
—
0.1
N.M.
—
0.1
N.M.
Annuity contracts in force (thousands)
230
230
—
%
Retirement Advantage® contracts in force
(thousands)
15
13
15.4
%
Annuity accumulated account value on
deposit /
Assets under management
$
5,339.8
$
4,841.8
10.3
%
Variable(1)
2,606.4
2,139.3
21.8
%
Fixed
2,733.4
2,702.5
1.1
%
Annuity accumulated value retention - 12
months
Variable accumulations
94.4
%
95.0
%
-0.6 pts
Fixed accumulations
94.3
%
94.7
%
-0.4 pts
Life
Premiums written and contract
deposits*
$
32.1
$
30.8
4.2
%
$
116.9
$
110.1
6.2
%
Premiums and contract charges earned
15.7
32.2
-51.2
%
108.4
120.2
-9.8
%
Net investment income
22.6
20.4
10.8
%
83.1
69.8
19.1
%
Other income
—
0.1
-100.0
%
0.3
0.2
50.0
%
Benefits
20.0
36.4
-45.1
%
127.9
134.6
-5.0
%
Operating expenses (includes DAC unlocking
and
amortization expense)
11.7
11.6
0.9
%
44.2
42.7
3.5
%
Income before income taxes
6.6
4.7
40.4
%
19.7
12.9
52.7
%
Net income / core earnings*
5.3
3.6
47.2
%
16.1
10.4
54.8
%
Pretax income increase (decrease) due to
evaluation of:
Deferred policy acquisition costs
$
0.2
$
(0.2
)
N.M.
$
0.2
$
0.3
-33.3
%
Life policies in force (in thousands)
200
202
-1.0
%
Life insurance in force
$
20,440
$
19,821
3.1
%
Lapse ratio - 12 months (Ordinary life
insurance)
3.5
%
4.2
%
-0.7 pts
N.M. - Not meaningful.
(1)
Amount reported as of December 31, 2021
excludes $834.6 million of assets under management held under
modified coinsurance reinsurance.
HORACE MANN EDUCATORS
CORPORATION
Business Segment Overview
(Unaudited)
($ in millions)
Three Months Ended
December 31,
Twelve Months Ended
December 31,
2021
2020
% Change
2021
2020
% Change
Corporate & Other(1)
Components of income (loss) before
tax:
Net investment (losses) gains
$
(0.4
)
$
10.5
N.M.
$
(11.0
)
$
(2.3
)
N.M.
Interest expense
(3.5
)
(3.5
)
—
%
(13.8
)
(14.8
)
6.8
%
Other operating expenses, net investment
income and other income
(4.2
)
(0.5
)
N.M.
(11.1
)
(5.4
)
-105.6
%
Income (loss) before income taxes
(8.1
)
6.5
N.M.
(35.9
)
(22.5
)
-59.6
%
Net income (loss)
(6.6
)
5.4
N.M.
(28.6
)
(16.8
)
-70.2
%
Investments
Retirement and Life
Fixed maturity securities, at fair value
(amortized cost, net 2021, $4,559.1; 2020, $4,458.1)
$
4,915.4
$
4,896.6
0.4
%
Equity securities, at fair value
110.1
82.9
32.8
%
Short-term investments
87.5
125.8
-30.4
%
Policy loans
141.3
149.3
-5.4
%
Limited partnership interests
492.9
276.6
78.2
%
Other investments
45.8
51.5
-11.1
%
Total Retirement and Life investments
5,793.0
5,582.7
3.8
%
Property & Casualty
Fixed maturity securities, at fair value
(amortized cost, net 2021, $663.5; 2020, $789.5)
723.8
867.2
-16.5
%
Equity securities, at fair value
27.2
31.7
-14.2
%
Short-term investments
52.1
6.8
N.M.
Limited partnership interests
171.8
136.1
26.2
%
Other investments
1.0
1.1
-9.1
%
Total Property & Casualty
investments
975.9
1,042.9
-6.4
%
Supplemental
Fixed maturity securities, at fair value
(amortized cost, net 2021, $575.1; 2020, $541.0)
600.1
581.5
3.2
%
Equity securities, at fair value
8.9
6.0
48.3
%
Short-term investments
17.2
6.4
168.8
%
Policy loans
0.8
0.8
—
%
Limited partnership interests
48.1
36.3
32.5
%
Other investments
3.5
1.8
94.4
%
Total Supplemental investments
678.6
632.8
7.2
%
Corporate & Other
Equity securities, at fair value
1.0
1.0
—
%
Short-term investments
1.0
2.8
-64.3
%
Total Corporate & Other
investments
2.0
3.8
-47.4
%
Total investments
$
7,449.5
$
7,262.2
2.6
%
Net investment income - investment
portfolio
Before tax
$
88.1
$
76.0
15.9
%
$
321.4
$
260.3
23.5
%
After tax
70.0
60.6
15.5
%
255.8
207.7
23.2
%
Investment income - deposit asset on
reinsurance
Before tax
$
26.0
25.2
3.2
%
$
101.1
97.3
3.9
%
After tax
20.6
19.9
3.5
%
79.9
76.9
3.9
%
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/20220201006006/en/
Heather J. Wietzel, Vice President, Investor Relations
217-788-5144 | investorrelations@horacemann.com
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