SPRINGFIELD, Ill., Feb. 8 /PRNewswire-FirstCall/ -- Horace Mann
Educators Corporation (NYSE:HMN) today reported net income of $22.2
million (54 cents per share) and $73.5 million ($1.81 per share)
for the three and twelve months ended December 31, 2009,
respectively, compared to net income of $22.9 million (58 cents per
share) and $10.9 million (27 cents per share) for the same periods
in 2008. Included in net income were net realized gains on
securities of $4.6 million ($3.2 million after tax, or 7 cents per
share) and $26.3 million ($17.2 million after tax, or 42 cents per
share) for the three and twelve months ended December 31, 2009,
respectively. In the same periods in 2008, net income included net
realized investment losses of $8.2 million (which after reflecting
the reduction of the deferred tax allowance established at
September 30, 2008 resulted in a gain of $2.7 million after tax, or
7 cents per share) and $63.9 million ($41.5 million after tax, or
$1.02 per share), respectively. All per-share amounts are stated on
a diluted basis. "With the further stabilization of the financial
markets in the fourth quarter, our confidence in the quality of our
investment portfolio continues to be validated. We finished the
year in a net unrealized gain position, as we did at the end of the
third quarter, with reported book value per share increasing 60
percent over the twelve months to $18.36. Meanwhile, key balance
sheet ratios, as well as risk based capital, remain more than
adequate to support our ratings," said Louis G. Lower, President
and Chief Executive Officer. "Horace Mann's financial stability,
combined with our established position in the educator market,
contributed to another quarter of solid growth in annuity sales,
which increased 10 percent compared to a year earlier, with the
fourth quarter's positive annuity net fund flows lifting the full
year result to near-record levels. While the reduced number of new
car sales in 2009 put pressure on applications for true new auto
units, a 4 percent increase in true new units in the fourth quarter
helped to close the gap to prior year, and we finished the full
year only 2 percent below 2008. Looking to 2010, we expect
additional improvement, as our growth in total points of
distribution and recent growth in agent count build on the momentum
we've established to transform our distribution system to a new,
more powerful model." "Net income before realized investment gains
and losses was 47 cents per share for the fourth quarter compared
to 51 cents a year ago. Within those results, the current period
included a 6 cent per share charge related to the North Carolina
Coastal Property Insurance Pool and the fourth quarter of 2008
benefited from a 10 cent per share non-recurring decrease in
federal income tax," continued Lower. "For property and casualty,
catastrophe losses were minimal in the quarter. The current
accident year combined ratio excluding catastrophes was
approximately 97 percent in the current quarter, which was nearly 7
percentage points higher than 2008, primarily reflecting an
increase in auto loss frequency, a higher level of property
sinkhole losses and a lower level of favorable current accident
year reserve development. Meanwhile, combined annuity and life
segment pretax earnings increased significantly in the fourth
quarter compared to prior year, primarily due to the positive
impact of financial market performance as well as a notable
improvement in the interest margin." "Looking forward to 2010, we
estimate full-year net income before realized investment gains and
losses of between $1.65 and $1.85 per share," Lower said. "This
projection anticipates: for property and casualty, a moderation in
recent auto frequency trends and a continuing high level of
property sinkhole losses in Florida; for annuity, continued strong
increases in fixed annuity spreads and an 8 to 10 percent increase
in the S&P 500 Index; and for life, continued growth in
investment income and more normal mortality levels." Segment
Earnings The property and casualty segment recorded net income of
$10.2 million for the quarter, a decrease of $4.3 million compared
to the same period in 2008. Pretax catastrophe costs in the current
quarter were $1.2 million compared to $9.9 million incurred in the
fourth quarter of 2008, which included approximately $7 million of
adverse development of reserves for hurricane losses occurring in
the third quarter. The fourth quarter 2009 property and casualty
combined ratio was 95.6 percent, including 0.9 percentage point due
to catastrophe costs, compared to 92.9 percent, including 7.2
percentage points due to catastrophe costs, in the prior year
period. Favorable prior years' reserve development totaling $3.4
million was recorded in the fourth quarter, which represented 2.4
percentage points on the combined ratio, compared to $6.7 million,
or 4.8 percentage points on the combined ratio, recorded in the
fourth quarter of 2008. Additionally, the fourth quarter 2009
combined ratio excluding catastrophes was reduced by 1.4 percentage
points due to favorable development of current accident year
reserves, compared to a benefit of 3.2 percentage points recorded
in the fourth quarter of 2008 due to similar favorable development.
In the current quarter, property and casualty pretax income was
reduced by $3.8 million as a result of writing off the company's
equity interest in the accumulated surplus of the North Carolina
Coastal Property Insurance Pool (the "Pool"). This write-off,
recorded in Other Income (Expense), is the result of recent
legislation that changed the ownership status of the Pool and also
capped future assessments that may be levied against insurers.
Annuity segment net income was $6.4 million for the three months
ended December 31, 2009, reflecting an increase of $3.5 million
compared to the same period in 2008. Annuity segment net income for
the fourth quarter and full year 2008 benefited from a
non-recurring reduction of $2.6 million in federal income tax
expense as a result of the IRS completing its examination of the
2002, 2004, 2005 and 2006 tax years. In the current quarter, the
positive financial market performance had a favorable impact on
both the valuation of annuity deferred policy acquisition costs and
the level of guaranteed minimum death benefit reserves, and
favorably affected the level of charges and fees earned on variable
contract deposits in the quarter compared to prior year. In
addition, the interest margin earned on fixed annuity assets
increased significantly compared to a year earlier, with net
interest spreads reaching 1.69 percent for the year, up 15 basis
points over 2008. Total annuity net fund flows continued to be
positive in the current period, as they were throughout 2008 and
2009, and total cash value persistency of 94 percent increased
about 1 percentage point compared to a year earlier. Life segment
net income of $5.5 million for the fourth quarter increased $1.3
million compared to the same period in 2008, primarily due to
growth in investment income. Life persistency remained in excess of
94 percent. Segment Revenues At $1.0 billion for the full year, the
company's total premiums written and contract deposits increased 3
percent and 5 percent compared to the three and twelve months ended
December 31, 2008, respectively, primarily reflecting increases in
annuity deposit receipts. Total property and casualty premiums
written were comparable to the fourth quarter of 2008 and increased
1 percent for the full year, primarily reflecting increases in
average property and auto premiums per policy. Annuity deposits
received increased 11 percent and 12 percent compared to the three
and twelve months ended December 31, 2008, respectively. Life
segment insurance premiums and contract deposits decreased 2
percent compared to the prior year periods. Sales and Distribution
For the three months ended December 31, 2009, total new auto sales
units increased slightly compared to the prior year, while the full
year reflected a 4 percent decrease compared to 2008. "In spite of
a decline in total auto sales units, average agent true new auto
productivity increased in 2009," said Lower. Annuity sales were up
10 percent in the fourth quarter, following a 50 percent increase
in the first half of 2009, and a 23 percent increase in the third
quarter, for a combined full-year growth of 31 percent compared to
2008. While flexible premium sales increased 22 percent during the
year, single premium and rollover deposits increased 34 percent and
were the primary drivers of growth in 2009. For the quarter and
full year, total new life production decreased 6 percent and less
than 1 percent compared to the prior year, reflecting a decline in
sales of third-party vendor products which more than offset the
growth in sales of Horace Mann's life products. Driven by the
mid-year introduction of a new educator-focused portfolio of Horace
Mann term and whole life products, sales of Horace Mann's life
products increased 27 percent and 4 percent compared to the three
and 12 months ended December 31, 2008. At December 31, 2009, Horace
Mann's 715 agents represented an increase of 7 percent compared to
a year earlier, with the number of agents growing steadily
throughout the year. Including 571 licensed producers who work for
the agents, Horace Mann's total points of distribution increased to
1,286, a growth of 21 percent over year-end 2008. "We are
encouraged by the increase in the number of agents in 2009. This
agent growth, coupled with the positive impact that our new Agency
Business Model is having on productivity and the recent
enhancements made to our field sales management structure, bodes
well for Horace Mann's future growth prospects," said Lower. Of the
715 agents at year-end, 249, or 35 percent, were Exclusive Agents,
comprised of 130 former employee agents and 119 new appointments.
The company's Exclusive Agent program was launched on January 1,
2009. Investment Gains and Losses In the fourth quarter of 2009,
pretax net realized investment gains were $4.6 million, which
included a $0.2 million credit-related impairment write-down and
$2.3 million of realized impairment losses on securities that were
disposed of during the quarter. The impairment amounts were more
than offset by $5.7 million of realized gains on other security
disposals and $1.4 million of litigation proceeds on debt
securities. Horace Mann's net unrealized investment gains on fixed
maturity and equity securities of $36.1 million at December 31,
2009 continued to reflect improvement compared to the net
unrealized loss of $327.2 million recorded at December 31, 2008.
"Credit spreads narrowed across virtually all asset classes in
2009, with our investment grade corporate bond portfolio
experiencing the most significant improvement in fair value. Some
of the more highly stressed asset classes also showed improvement,
including our financial institution bond and preferred stock
holdings, as well as our CMBS and high yield bond portfolios," said
Lower. "In light of the widespread improvement in the credit
markets, coupled with our insignificant exposure to sub-prime,
Alt-A, other lower-quality structured securities and commercial
mortgage whole loans, we remain very comfortable with the
underlying credit quality of our investment portfolio and have a
high level of confidence that any future investment losses relating
to the current economic environment will be very manageable."
Horace Mann -- the largest national multiline insurance company
focusing on educators' financial needs -- provides auto and
homeowners insurance, retirement annuities, life insurance and
other financial solutions. Founded by Educators for Educators® in
1945, the company is headquartered in Springfield, Ill. For more
information, visit http://www.horacemann.com/. 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 period ended September 30, 2009 and the
company's past and future filings and reports filed with the
Securities and Exchange Commission for information concerning the
important factors that could cause actual results to differ
materially from those in forward-looking statements. HORACE MANN
EDUCATORS CORPORATION Digest of Earnings and Highlights (Unaudited)
(Dollars in Millions, Except Per Share Data) Quarter Ended Year
Ended December 31, December 31, 2009 2008 % Change 2009 2008 %
Change DIGEST OF EARNINGS Net income $22.2 $22.9 -3.1% $73.5 $10.9
N.M. Net income per share: Basic $0.57 $0.59 -3.4% $1.88 $0.27 N.M.
Diluted $0.54 $0.58 -6.9% $1.81 $0.27 N.M. Weighted average number
of shares and equivalent shares (in millions) (A): Basic 39.2 39.1
0.3% 39.2 39.8 -1.5% Diluted 40.6 39.8 2.0% 40.5 40.6 -0.2%
HIGHLIGHTS Operations Insurance premiums written and contract
deposits $246.0 $239.1 2.9% $1,003.7 $960.1 4.5% Return on equity
(B) 12.7% 1.9% N.M. Property & Casualty GAAP combined ratio
95.6% 92.9% N.M. 99.5% 100.7% N.M. Effect of catastrophe costs on
the Property & Casualty combined ratio 0.9% 7.2% N.M. 6.1%
13.7% N.M. Dedicated agents (C) 715 670 6.7% Licensed producers (D)
571 394 44.9% Total points of distribution 1,286 1,064 20.9%
Additional Per Share Information Dividends paid $0.08 $0.0525 52.4%
$0.2375 $0.3675 -35.4% Book value (E) $18.36 $11.49 59.8% Financial
Position Total assets $6,343.1 $5,507.7 15.2% Short-term debt 38.0
38.0 - Long-term debt 199.6 199.5 0.1% Total shareholders' equity
719.5 448.8 60.3% N.M. - Not meaningful. (A) During the three
months ended March 31, 2008, the Company repurchased 1,636,376
shares of its common stock at an aggregate cost of $29.5 million,
or an average cost of $18.01 per share. During the three months
ended June 30, 2008, the Company repurchased 1,561,849 shares of
its common stock at an aggregate cost of $24.8 million, or an
average cost of $15.93 per share. (B) Based on trailing 12-month
net income and average quarter-end shareholders' equity. (C) Agents
under contract with the Company to market only the Company's
products and limited additional third-party vendor products
authorized by the Company. (D) Includes licensed producers working
in dedicated agents' offices and excludes independent agents. (E)
Book value per share excluding the fair value adjustment for
investments was $17.79 at December 31, 2009 and $16.15 at December
31, 2008. Ending shares outstanding were 39,184,721 at December 31,
2009 and 39,061,788 at December 31, 2008. - 1 - HORACE MANN
EDUCATORS CORPORATION Statements of Operations and Supplemental
GAAP Consolidated Data (Unaudited) (Dollars in Millions) Quarter
Ended Year Ended December 31, December 31, 2009 2008 % Change 2009
2008 % Change STATEMENTS OF OPERATIONS Insurance premiums and
contract charges earned $167.8 $168.8 -0.6% $659.6 $658.5 0.2% Net
investment income 65.4 58.1 12.6% 246.8 230.3 7.2% Net realized
investment gains (losses) 4.6 (8.2) N.M. 26.3 (63.9) N.M. Other
income (expense) (A) (1.9) 2.4 N.M. 4.7 9.9 -52.5% Total revenues
235.9 221.1 6.7% 937.4 834.8 12.3% Benefits, claims and settlement
expenses 110.1 111.3 -1.1% 458.7 471.5 -2.7% Interest credited 35.9
33.9 5.9% 139.4 131.8 5.8% Policy acquisition expenses amortized
20.2 23.1 -12.6% 80.4 79.1 1.6% Operating expenses 35.6 33.7 5.6%
141.2 132.4 6.6% Amortization of intangible assets - 1.2 -100.0%
0.2 5.3 -96.2% Interest expense 3.5 4.3 -18.6% 14.0 14.5 -3.4%
Total benefits, losses and expenses 205.3 207.5 -1.1% 833.9 834.6
-0.1% Income before income taxes 30.6 13.6 125.0% 103.5 0.2 N.M.
Income tax expense (benefit) 8.4 (9.3) N.M. 30.0 (10.7) N.M. Net
income $22.2 $22.9 -3.1% $73.5 $10.9 N.M. ANALYSIS OF PREMIUMS
WRITTEN AND CONTRACT DEPOSITS Property & Casualty Automobile
and property (voluntary) $136.0 $134.8 0.9% $550.2 $542.2 1.5%
Involuntary and other property & casualty 0.8 2.3 -65.2% 3.3
3.7 -10.8% Total Property & Casualty 136.8 137.1 -0.2% 553.5
545.9 1.4% Annuity deposits 81.7 73.9 10.6% 349.8 311.7 12.2% Life
27.5 28.1 -2.1% 100.4 102.5 -2.0% Total $246.0 $ 239.1 2.9%
$1,003.7 $960.1 4.5% ANALYSIS OF SEGMENT NET INCOME (LOSS) Property
& Casualty $10.2 $14.5 -29.7% $30.0 $28.1 6.8% Annuity 6.4 2.9
120.7% 21.2 17.3 22.5% Life 5.5 4.2 31.0% 18.4 16.4 12.2% Corporate
and other (B) 0.1 1.3 -92.3% 3.9 (50.9) N.M. Net income 22.2 22.9
-3.1% 73.5 10.9 N.M. Catastrophe costs, after tax, included above
(C) (0.8) (6.5) -87.7% (21.5) (48.1) -55.3% N.M. - Not meaningful.
(A) The three and twelve months ended December 31, 2009 include a
charge of $3.8 million to write off the company's equity interest
in the accumulated surplus of the North Carolina Coastal Property
Insurance Pool as a result of recent legislation in that state. (B)
The Corporate and Other segment includes interest expense on debt
and the impact of realized 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 4. (C) Includes allocated loss
adjustment expenses and catastrophe reinsurance reinstatement
premiums. See also page 3. - 2 - HORACE MANN EDUCATORS CORPORATION
Supplemental Business Segment Overview (Unaudited) (Dollars in
Millions) Quarter Ended Year Ended December 31, December 31, 2009
2008 % Change 2009 2008 % Change PROPERTY & CASUALTY Premiums
written $136.8 $137.1 -0.2% $ 553.5 $ 545.9 1.4% Premiums earned
138.9 139.1 -0.1% 547.3 541.1 1.1% Net investment income 8.8 8.7
1.1% 34.4 35.7 -3.6% Other income (expense) (A) (3.6) 0.4 N.M.
(1.3) 1.5 N.M. Losses and loss adjustment expenses (LAE) 97.9 95.9
2.1% 407.1 416.1 -2.2% Operating expenses (includes policy
acquisition expenses amortized) 34.8 33.2 4.8% 137.6 128.5 7.1%
Income before tax 11.4 19.1 -40.3% 35.7 33.7 5.9% Net income 10.2
14.5 -29.7% 30.0 28.1 6.8% Net investment income, after tax 7.7 7.2
6.9% 29.5 29.8 -1.0% Catastrophe costs, after tax (B) 0.8 6.5
-87.7% 21.5 48.1 -55.3% Catastrophe losses and LAE, before tax 1.2
9.9 -87.9% 33.1 73.9 -55.2% Reinsurance reinstatement premiums,
before tax - - - - - - Operating statistics: Loss and loss
adjustment expense ratio 70.5% 69.0% N.M. 74.4% 76.9% N.M. Expense
ratio 25.1% 23.9% N.M. 25.1% 23.8% N.M. Combined ratio 95.6% 92.9%
N.M. 99.5% 100.7% N.M. Effect on the combined ratio of: Catastrophe
costs 0.9% 7.2% N.M. 6.1% 13.7% N.M. Claims office consolidation
costs (all in LAE) 0.1% 3.0% N.M. 0.7% 0.8% N.M. Automobile and
property detail: Premiums written (voluntary)(C) $136.0 $134.8 0.9%
$ 550.2 $ 542.2 1.5% Automobile 93.2 92.6 0.6% 372.5 367.8 1.3%
Property 42.8 42.2 1.4% 177.7 174.4 1.9% Premiums earned
(voluntary)(C) 137.3 136.1 0.9% 544.1 537.8 1.2% Automobile 93.0
91.9 1.2% 369.8 365.5 1.2% Property 44.3 44.2 0.2% 174.3 172.3 1.2%
Policies in force (voluntary) (in thousands) 790 798 -1.0%
Automobile 528 535 -1.3% Property 262 263 -0.4% Policy renewal rate
(voluntary) Automobile (6 months) 91.3% 91.1% N.M. Property (12
months) 88.8% 88.6% N.M. Voluntary automobile operating statistics:
Loss and loss adjustment expense ratio 76.6% 67.0% N.M. 72.4% 68.0%
N.M. Expense ratio 24.4% 23.4% N.M. 25.1% 23.5% N.M. Combined ratio
101.0% 90.4% N.M. 97.5% 91.5% N.M. Effect on the combined ratio of:
Catastrophe costs 0.2% 0.0% N.M. 0.8% 1.2% N.M. Claims office
consolidation costs (all in LAE) 0.1% 3.5% N.M. 0.8% 0.9% N.M.
Total property operating statistics: Loss and loss adjustment
expense ratio 57.6% 74.7% N.M. 78.6% 97.2% N.M. Expense ratio 25.8%
24.8% N.M. 24.9% 24.2% N.M. Combined ratio 83.4% 99.5% N.M. 103.5%
121.4% N.M. Effect on the combined ratio of: Catastrophe costs 2.4%
21.6% N.M. 17.6% 40.4% N.M. Claims office consolidation costs (all
in LAE) 0.1% 1.9% N.M. 0.4% 0.6% N.M. Prior years' reserves
favorable (adverse) development, pretax Voluntary automobile $2.5 $
6.3 -60.3% $ 9.2 $ 16.0 -42.5% Total property 0.9 (0.6) N.M. 1.8
(0.5) N.M. Other property and casualty - 1.0 -100.0% 0.7 2.6 -73.1%
Total 3.4 6.7 -49.3% 11.7 18.1 -35.4% N.M. - Not meaningful. (A)
The three and twelve months ended December 31, 2009 include a
charge of $3.8 million to write off the company's equity interest
in the accumulated surplus of the North Carolina Coastal Property
Insurance Pool as a result of recent legislation in that state. (B)
Includes allocated loss adjustment expenses and catastrophe
reinsurance reinstatement premiums. (C) Amounts are net of
additional ceded premiums to reinstate the Company's property and
casualty catastrophe reinsurance coverage, if any, as quantified
above. - 3 - HORACE MANN EDUCATORS CORPORATION Supplemental
Business Segment Overview (Unaudited) (Dollars in Millions) Quarter
Ended Year Ended December 31, December 31, 2009 2008 % Change 2009
2008 % Change ANNUITY Contract deposits $81.7 $73.9 10.6% $ 349.8 $
311.7 12.2% Variable 29.7 31.8 -6.6% 112.2 134.4 -16.5% Fixed 52.0
42.1 23.5% 237.6 177.3 34.0% Contract charges earned 4.3 3.9 10.3%
14.5 17.7 -18.1% Net investment income 40.1 34.7 15.6% 149.7 136.2
9.9% Net interest margin (without realized investment gains and
losses) 14.2 10.5 35.2% 49.7 42.7 16.4% Other income 0.9 0.8 12.5%
3.1 4.9 -36.7% Mortality loss and other reserve changes (0.2) (1.3)
-84.6% 0.5 (1.7) N.M. Operating expenses (includes policy
acquisition expenses amortized) 8.8 12.8 -31.3% 35.5 39.0 -9.0%
Amortization of intangible assets - 0.9 -100.0% - 4.0 -100.0%
Income before tax 10.4 0.2 N.M. 32.3 20.6 56.8% Net income 6.4 2.9
120.7% 21.2 17.3 22.5% Pretax income increase (decrease) due to
valuation of: Deferred policy acquisition costs $0.5 $(4.1) N.M. $
1.3 $ (4.0) N.M. Value of acquired insurance in force - - - - - -
Guaranteed minimum death benefit reserve 0.1 (1.0) N.M. 0.8 (1.3)
N.M. Annuity contracts in force (in thousands) 178 171 4.1%
Accumulated value on deposit $3,713.6 $3,262.3 13.8% Variable
1,226.4 965.2 27.1% Fixed 2,487.2 2,297.1 8.3% Annuity accumulated
value retention - 12 months Variable accumulations 93.4% 93.2% N.M.
Fixed accumulations 94.4% 93.5% N.M. LIFE Premiums and contract
deposits $27.5 $28.1 -2.1% $ 100.4 $ 102.5 -2.0% Premiums and
contract charges earned 24.6 25.8 -4.7% 97.8 99.7 -1.9% Net
investment income 16.8 14.8 13.5% 63.8 59.3 7.6% Income before tax
8.7 6.4 35.9% 28.9 25.6 12.9% Net income 5.5 4.2 31.0% 18.4 16.4
12.2% Pretax income increase (decrease) due to valuation of:
Deferred policy acquisition costs $(0.7) $(0.3) 133.3% $ (0.9) $
(0.2) 350.0% Life policies in force (in thousands) 213 221 -3.6%
Life insurance in force $13,761 $13,672 0.7% Lapse ratio - 12
months (Ordinary life insurance) 5.4% 5.4% N.M. CORPORATE AND OTHER
(A) Components of income (loss) before tax: Net realized investment
gains (losses) $4.6 $(8.2) N.M. $ 26.3 $ (63.9) N.M. Interest
expense (3.5) (4.3) -18.6% (14.0) (14.5) -3.4% Other operating
expenses, net investment income and other income (1.0) 0.4 N.M.
(5.7) (1.3) N.M. Income (loss) before tax 0.1 (12.1) N.M. 6.6
(79.7) N.M. Net income (loss) 0.1 1.3 -92.3% 3.9 (50.9) N.M. N.M. -
Not meaningful. (A) The Corporate and Other segment includes
interest expense on debt and the impact of realized 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. - 4 - HORACE MANN EDUCATORS CORPORATION
Supplemental Business Segment Overview (Unaudited) (Dollars in
Millions) Quarter Ended Year Ended December 31, December 31, 2009
2008 % Change 2009 2008 % Change INVESTMENTS Annuity and Life Fixed
maturities, at fair value (amortized cost 2009, $3,341.1; 2008,
$3,145.4) $3,358.9 $2,876.7 16.8% Equity securities, at fair value
(cost 2009, $43.2; 2008, $55.6) 40.6 38.3 6.0% Short-term
investments 252.6 154.1 63.9% Short-term investments, securities
lending collateral - - - Policy loans and other 116.0 109.2 6.2%
Total Annuity and Life investments 3,768.1 3,178.3 18.6% Property
& Casualty Fixed maturities, at fair value (amortized cost
2009, $720.9; 2008, $642.5) 741.0 608.6 21.8% Equity securities, at
fair value (cost 2009, $18.3; 2008, $30.6) 19.1 23.3 -18.0%
Short-term investments 25.4 66.0 -61.5% Short-term investments,
securities lending collateral - - - Total Property & Casualty
investments 785.5 697.9 12.6% Corporate investments 21.0 25.6
-18.0% Total investments 4,574.6 3,901.8 17.2% Net investment
income Before tax $65.4 $58.1 12.6% $ 246.8 $ 230.3 7.2% After tax
44.4 39.3 13.0% 167.5 156.3 7.2% Net realized investment gains
(losses) by investment portfolio included in Corporate and Other
segment income (loss) Property & Casualty $- $(2.8) -100.0% $
(2.5) $ (16.4) -84.8% Annuity 5.7 (5.3) N.M. 22.0 (47.1) N.M. Life
(1.1) (0.1) N.M. 6.8 (0.4) N.M. Corporate and Other - - - - - -
Total, before tax 4.6 (8.2) N.M. 26.3 (63.9) N.M. Total, after tax
3.2 2.7 18.5% 17.2 (41.5) N.M. Per share, diluted $0.07 $0.07 - $
0.42 $ (1.02) N.M. N.M. - Not meaningful. - 5 - HORACE MANN
EDUCATORS CORPORATION Supplemental Business Segment Overview
(Unaudited) (Dollars in Millions) September June March December 30,
30, 31, 31, December 31, 2009 2009 2009 2009 2008 Net Net Net Net
Net Unreal- Unreal- Unreal- Unreal- Unreal- ized ized ized ized
ized Fair Gain Gain Gain Gain Gain Value (Loss) (Loss) (Loss)
(Loss) (Loss) FIXED MATURITY & EQUITY SECURITY INVESTMENTS
Fixed income securities U.S. government and federally sponsored
agency bonds $347.2 $(13.8) $2.0 $(2.5) $3.4 $4.9 Municipal bonds
913.9 22.8 56.1 6.3 (3.7) (14.1) Corporate bonds Financial
institutions 240.0 8.1 6.9 (11.0) (35.3) (19.9) Other 1,359.0 73.0
84.6 (14.3) (140.1) (122.6) High yield 183.1 (5.9) (11.8) (26.4)
(28.0) (38.0) Foreign government bonds 41.9 2.0 3.0 0.7 (0.1) 0.5
Mortgage-backed securities Prime agency 455.1 18.3 23.9 18.5 21.2
20.5 Prime other 16.1 0.4 0.5 (0.8) (0.2) (0.6) Sub-prime, Alt-A
0.5 (0.1) (0.4) (0.8) (0.9) (0.7) Commercial mortgage-backed
securities 267.4 (67.5) (71.7) (106.6) (115.8) (108.6) Asset-backed
securities Sub-prime, Alt-A 0.5 - (0.5) (0.3) (0.1) 0.1
Collateralized debt obligations, collateralized loan obligations
14.3 (4.1) (3.3) (4.0) (4.7) (0.4) Other 204.4 8.2 4.5 (4.8) (8.3)
(8.5) Preferred stocks Financial institutions 75.5 (6.4) (9.5)
(19.7) (34.2) (29.8) Other 39.0 0.3 (0.7) (6.1) (12.5) (10.0) Total
fixed income securities 4,157.9 35.3 83.6 (171.8) (359.3) (327.2)
Common stocks 1.7 0.8 0.5 0.5 (0.3) - Derivatives - - - - - - Total
fixed maturity and equity security investments $4,159.6 $36.1 $84.1
$(171.3) $(359.6) $(327.2) - 6 - DATASOURCE: Horace Mann Educators
Corporation CONTACT: Dwayne D. Hallman, Senior Vice President -
Finance of Horace Mann Educators Corporation, +1-217-788-5708 Web
Site: http://www.horacemann.com/
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