Horace Mann announces second-quarter results were affected by higher-than-historical average catastrophe activity and equity market declines
14 July 2022 - 6:15AM
Business Wire
Updates full-year earnings guidance due to
external events; sales momentum continues
To announce final second-quarter 2022 financial
results on August 4
Horace Mann Educators Corporation (NYSE:HMN) today announced it
experienced second-quarter catastrophe losses well above the
company’s 10-year historical average. In addition, the significant
equity market declines during the quarter resulted in unfavorable
DAC unlocking.
“The confluence of external events that is temporarily impacting
our financial performance does not detract from our unwavering
commitment to the education market and the achievement of our
long-term financial objectives,” said President and CEO Marita
Zuraitis. “However, largely based on the level of catastrophe
losses and effects of equity market declines, we are updating our
full-year 2022 core earnings per share guidance range to $2.10 to
$2.30, including a second-quarter loss per share of approximately
10 cents to 20 cents.
“Horace Mann continues to leverage its leadership position in
the education market, with top-line sales progress continuing to
support our long-term objectives,” Zuraitis continued. “Our
Supplemental & Group Benefits segment is seeing momentum build,
with voluntary product sales in the second quarter almost $1
million above the prior year level. Newly acquired Madison National
continues to meet our expectations, and we remain very optimistic
about the long-term growth potential of employer-sponsored and
voluntary offerings sold through the worksite. In addition, auto
sales continue at the strongest levels since the pandemic
began.
“At the same time, we are supporting our policyholders in the
Midwest and Plains states who were affected by the multiple severe
thunderstorm, wind and hail events concentrated in May,” Zuraitis
said. “Due to the level of storm activity, we now expect our
catastrophe losses for the second quarter will be approximately $44
million to $47 million, pretax.
“As we noted on our first-quarter call, in line with the broader
industry, we began to see higher near-term auto and property loss
costs because of inflation,” Zuraitis commented. “Inflation is also
affecting the settlement of claims from recent accident years that
remain open because of pandemic-related systemic delays. In
second-quarter results, we are planning to recognize the effect of
those inflationary trends by adding approximately $6 million,
pretax, to Property & Casualty reserves. We also continue to
implement rate and other underwriting changes that address these
inflationary trends.”
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. This will be somewhat offset by full-year returns close to
historical averages for the portfolio of commercial mortgage loan
funds. 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.
Reflecting the catastrophe losses and inflationary trends,
full-year core earnings for the Property & Casualty segment are
now expected to be in the range of $10 million to $14 million,
compared with guidance of $44 million to $48 million provided when
the company announced year-end results. The revised full-year 2022
guidance also 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.
Largely due to the effect of equity market declines, full-year
core earnings for the Life & Retirement segment are now
expected to be in the range of $56 million to $59 million, compared
with guidance of $74 million to $77 million provided when the
company announced year-end results. The change in guidance for Life
& Retirement reflects approximately $6 million (after tax) of
market-performance-related DAC unlocking in the first half of 2022.
Equity market declines also are resulting in lower charges and fees
on asset-based accounts.
“Now, more than ever, Horace Mann remains dedicated to helping
our nation’s educators protect what they have today and prepare for
a successful tomorrow,” Zuraitis concluded. “We expect to resume
our trajectory toward a sustainable double-digit return on equity
in 2023. Our capital generating capacity remains strong. We have
used $14 million to repurchase a total of 375,371 shares through
the first six months of 2022, and the Board of Directors authorized
a new $50 million share repurchase plan in late May.”
Second-quarter financial results to be announced August
4
Horace Mann plans to release its second-quarter 2022 results on
Thursday, August 4, at 6:30 p.m. Eastern Time. At that time, the
quarterly news release, investor supplement and investor
presentation will be available on the company’s website at
investors.horacemann.com.
Management will host a conference call to discuss the financial
results on Friday, August 5 at 11:00 a.m. Eastern Time. Investors
can access the webcast of the call via the Events page of the
company’s investor site or by dialing 844-735-3325. For the
webcast, please log on to the site several minutes in advance to
register and download any required audio software. On-demand replay
will be available later that day.
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 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.
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version on businesswire.com: https://www.businesswire.com/news/home/20220713005805/en/
Heather J. Wietzel Vice President, Investor Relations and
Enterprise Communications 217.788.5144
investorrelations@horacemann.com
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