Horace Mann Reports Fourth-Quarter and Full-Year 2018 Results

Q4 Net Loss of $0.49 per Share and Core Loss* of $0.21 per Share

2018 Net Income of $0.44 per Share and Core Earnings* of $0.68 per
Share

  • Fourth-quarter net and core losses included $0.85 per share related to
    catastrophe costs, $0.08 per share for expenses associated with
    strategic acquisitions announced during the period and $0.07 per share
    for expenses related to DAC unlocking
  • Underlying results show solid progress, including 2.6 point
    improvement in underlying auto loss ratio* and 1.0 point improvement
    in underlying property loss ratio* compared to the prior year
  • 6% growth in full-year Retirement sales deposits, with strong market
    response to fee-based product offerings
  • 20% increase in full-year Life sales, reflecting gains across all
    product types
  • Full-year 2019 core earnings expected to be $2.00 – $2.20 per share,
    excluding contribution from pending NTA acquisition

SPRINGFIELD, Ill.–(BUSINESS WIRE)–Horace Mann Educators Corporation (NYSE:HMN) today reported financial
results for the quarter and year ended December 31, 2018:

 
Horace Mann Consolidated Financial Highlights
   
Three Months Ended Twelve Months Ended
December 31, December 31,
($ in millions, except per share amounts) 2018   2017   Change 2018   2017   Change
 
Total revenues $ 278.5 $ 303.0 -8.1% $ 1,191.6 $ 1,171.5 1.7%
Net income (loss) (20.3 ) 125.3 -116.2% 18.3 169.4 -89.2%
Net investment gains (losses) after tax (11.6 ) (0.9 )

N.M.

(10.1 ) (1.7 ) N.M.
Re-measurement of net deferred tax liability (DTL)   99.0  

N.M.

  99.0   N.M.
Core earnings (loss)* (8.7 ) 27.2 -132.0% 28.4 72.1 -60.6%
Per diluted share:
Net income (loss) (0.49 ) 3.00 -116.3% 0.44 4.08 -89.2%
Net investment gains (losses) after tax (0.28 ) (0.02 ) N.M. (0.24 ) (0.04 ) N.M.
Re-measurement of DTL   2.37   N.M.   2.38   N.M.
Core earnings (loss) per diluted share* (0.21 ) 0.65 -132.3% 0.68 1.74 -60.9%
Book value per share 31.50 36.88 -14.6%
Book value per share excluding net unrealized investment gains on
securities*
29.13 29.51 -1.3%
N.M. – Not meaningful.
* These measures are not based on accounting principles generally
accepted in the United States (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.
 

“The combination of an unprecedented level of catastrophe costs, a
challenging investment environment and expenses related to the two
strategic acquisitions we announced during the period led to both a net
and core loss for the fourth quarter and significantly reduced full-year
return on equity,” said President and CEO Marita Zuraitis.
“Consequently, our results do not convey the important progress we
continue to make on the strategic initiatives that will drive long-term
improvement in our return on equity. For example, the 2.6 point
improvement in the underlying 2018 auto loss ratio was ahead of plan,
adding almost one point to ROE.”

In the fourth quarter of 2018, Horace Mann announced plans to acquire:

  • National Teachers Associates (NTA), a family-owned insurer focused on
    the education market with complementary products and distribution.
    Headquartered in Dallas, NTA specializes in developing, marketing and
    underwriting supplemental insurance products, including cancer and
    heart.
  • Benefit Consultants Group (BCG), a retirement plan provider with
    strong employer plan infrastructure and competencies based in Cherry
    Hill, NJ. BCG expands Horace Mann’s strategic capabilities in the
    retirement market.

“Looking forward to 2019, we are well positioned to achieve profitable
growth, putting us back on the path to a double-digit return on equity,”
noted Zuraitis. “Our two announced acquisitions bring exciting
capabilities to expand our product set, enhance our distribution
channels and further improve our infrastructure, enhancing our long-term
view.

“We are projecting full-year 2019 core earnings between $2.00 and $2.20
per share,” stated Zuraitis. “We see continued progress on our strategic
initiatives, including a return to underlying auto profitability. At the
same time, we are anticipating an increasingly challenged investment
environment and have also updated our models with a higher catastrophe
load than previous years’ guidance. Because the timing is uncertain, our
stated guidance does not yet include any contribution from NTA, which
should close in mid-2019 and be immediately accretive to both earnings
and return on equity.”

 

Property and Casualty Segment Shows Underlying Improvement in
Unprecedented Cat Year

(All comparisons vs. same period in 2017, unless noted
otherwise)

 
 

Three Months Ended

December 31,

 

Twelve Months Ended

December 31,

($ in millions) 2018   2017   Change 2018   2017   Change
 
Property and Casualty written premiums $ 166.4 $ 164.8 1.0% $ 681.5 $ 662.8 2.8%
Property and Casualty net income (loss) (9.9 ) 15.6 N.M. (14.3 ) 17.8 N.M.
Property and Casualty core earnings (loss)* (9.9 ) 15.0 N.M. (14.3 ) 17.2 N.M.
Property and Casualty combined ratio 113.3 % 94.0 % 19.3 pts 109.3 % 103.3 % 6.0 pts
Property and Casualty underlying loss ratio* 59.3 % 65.2 % -5.9 pts 65.5 % 67.5 % -2.0 pts
Property and Casualty expense ratio 28.1 % 27.0 % 1.1 pts 27.0 % 26.7 % 0.3 pts
Property and Casualty catastrophe costs 27.0 % 2.2 % 24.8 pts 17.1 % 9.5 % 7.6 pts
Property and Casualty underlying
combined ratio* 86.3 % 92.2 % -5.9 pts 92.2 % 94.2 % -2.0 pts
Auto combined ratio 102.2 % 104.7 % -2.5 pts 103.1 % 106.3 % -3.2 pts
Auto underlying loss ratio* 72.8 % 77.6 % -4.8 pts 74.6 % 77.2 % -2.6 pts
Property combined ratio 139.8 % 72.2 % 67.6 pts 123.1 % 97.0 % 26.1 pts
Property underlying loss ratio* 30.7 % 39.8 % -9.1 pts 46.2 % 47.2 % -1.0 pts
 

For 2018, the Property and Casualty combined ratio was 109.3%, with
full-year catastrophe costs adding 17.1 points to the ratio. As
previously announced, the most significant event in the fourth quarter
was the Camp Fire, which generated gross losses of $150.0 million. After
reinsurance, the financial impact of that event was $38.0 million
pretax, including $6.7 million in reinsurance reinstatement premiums. In
addition, Hurricane Michael and seven smaller events added $7.3 million
to catastrophe losses for the fourth quarter.

Excluding reinsurance reinstatement premiums, written premiums*
increased 3.8% for 2018 and 5.1% for the quarter, driven primarily by
rate actions.

The underlying auto loss ratio improved 2.6 points in 2018, reflecting
the accelerating impact of rate actions and underwriting initiatives to
improve profitability. The underlying property loss ratio also improved
for the year by 1.0 points, reflecting continued rate actions and
underwriting initiatives.

Auto and property policy retention rates for the current quarter were
81.9% and 88.0%, respectively.

 

Retirement Segment Sales Increase 6% Over 2017

(All comparisons vs. same period in 2017, unless noted
otherwise)

 
  Three Months Ended   Twelve Months Ended
December 31, December 31,
($ in millions) 2018   2017   Change 2018   2017   Change
 
Retirement sales deposits* $ 135.1 $ 119.9 12.7 % $ 518.7 $ 491.8 5.5 %
Retirement assets under management 6,843.0 6,832.0 0.2 %
Retirement net income 4.1 51.5 -92.0 % 41.7 88.4 -52.8 %
Retirement core earnings* 4.1 12.0 -65.8 % 41.7 48.9 -14.7 %
Retirement core earnings excluding DAC
unlocking* 7.1 12.7 -44.1 % 44.8 49.6 -9.7 %
 

For 2018, Retirement sales deposits increased 5.5%, driven entirely by
33% growth in fee-based product sales, including our Retirement
Advantage products. Retirement assets under management, which are
predominantly spread-based fixed annuities, were flat compared to a year
ago. Total cash value persistency remained strong at 94.4% for variable
annuities and 94.0% for fixed annuities.

Core earnings excluding DAC unlocking declined for the quarter and the
year, primarily reflecting a lower net interest margin on fixed
annuities and, to a lesser extent, higher expenses associated with
continued investment in business capabilities.

The net interest spread for 2018 was 171 basis points on fixed annuity
assets under management of $4.7 billion, primarily reflecting lower
returns on alternative investments and a decline in prepayment activity.

 

Life Segment Reports Improved Earnings for Quarter and Full Year

(All comparisons vs. same period in 2017, unless noted
otherwise)

 
  Three Months Ended   Twelve Months Ended
December 31, December 31,
($ in millions) 2018   2017   Change 2018   2017   Change
 
Life sales* $ 6.1 $ 6.1 % $ 21.2 $ 17.7 19.8 %
Life mortality costs 9.2 12.0 -23.3 % 35.1 36.1 -2.8 %
Life net income 3.8 63.3 -94.0 % 18.8 77.6 -75.8 %
Life core earnings* 3.8 3.0 26.7 % 18.8 17.3 8.7 %
 

Life sales* increased 19.8% for the year, with strong new policy growth
for both recurring and single premium products. This reflects the
sustained emphasis on meeting the needs of the under-insured educator
market through enhanced marketing efforts and ease of doing business
improvements. Fourth quarter sales were slightly ahead of the strong
results generated in last year’s fourth-quarter, and core earnings were
up 26.7%.

Life core earnings were up 8.7% for the full year, as fourth quarter
mortality costs continued to compare favorably with actuarial
assumptions. Life persistency of 95.4% was comparable to 12 months
earlier.

 

Full-year Net Investment Income Flat with 2017

(All comparisons vs. same period in 2017, unless noted
otherwise)

   
Three Months Ended Twelve Months Ended
December 31, December 31,
($ in millions) 2018   2017   Change 2018   2017   Change
 
Total net investment income $ 88.4 $ 98.6 -10.3 % $ 376.5 $ 373.6 0.8 %
Pretax net investment losses (14.4 ) (1.7 ) N.M. (12.5 ) (3.4 ) N.M.
Pretax net unrealized investment gains
(losses) on securities 141.4 440.3 -67.9 %
 

While annuity asset balances in the Retirement segment rose modestly,
annual investment yields continue to be impacted by the low interest
rate environment of recent years. Full-year total net investment income
was flat with 2017, having benefited from elevated prepayment activity.
The decline in fourth-quarter net investment income reflected lower
returns on alternative investments and a return to anticipated levels of
prepayment activity.

Net realized investment losses on securities were up from last year,
largely because of declines in the fair values of equity securities. Net
unrealized investment gains on securities declined from last year due to
increases in interest rates, which reduced the fair values of fixed
maturity securities.

Capital Position Supports Business Investments

At year-end 2018, shareholders’ equity was $1.3 billion, or $31.50 per
share. Excluding net unrealized investment gains on securities,
shareholders’ equity was $1.2 billion, or $29.13 per share. The
company’s conservative balance sheet forms a strong foundation to invest
in organic and inorganic growth while simultaneously supporting an
above-peer dividend and opportunistic share repurchase.

On January 2, 2019, the company completed the acquisition of BCG for $25
million in cash. The NTA transaction is expected to close in mid-2019,
pending regulatory approvals and other customary closing conditions, for
a purchase price of $405 million. Fourth-quarter and full-year expenses
of $3.5 million and $4.0 million, after tax, related to these two
transactions are reported in the Corporate and Other segment.

As of December 31, 2018, $22.8 million remained authorized for future
share repurchases under the company’s share repurchase program.

Quarterly Webcast

Horace Mann’s senior management will discuss the company’s 2018 and
fourth quarter financial results with investors and analysts on February
6, 2019 at 10:30 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 period ended September 30, 2018 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 (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     Twelve Months Ended  
December 31, December 31,

2018

 

2017

Change

2018

 

2017

Change

EARNINGS SUMMARY

Net income (loss) $ (20.3 ) $ 125.3 -116.2 % $ 18.3 $ 169.4 -89.2 %
Net investment gains (losses), after tax (11.6 ) (0.9 ) N.M. (10.1 ) (1.7 ) N.M.
Re-measurement of net deferred tax liability (DTL) 99.0 N.M. 99.0 N.M.
Core earnings (loss)* (8.7 ) 27.2 -132.0 % 28.4 72.1 -60.6 %
 
Per diluted share:
Net income (loss) $ (0.49 ) $ 3.00 -116.3 % $ 0.44 $ 4.08 -89.2 %
Net investment gains (losses), after tax $ (0.28 ) $ (0.02 ) N.M. $ (0.24 ) $ (0.04 ) N.M.
Re-measurement of DTL $ $ 2.37 N.M. $ $ 2.38 N.M.
Core earnings (loss)* $ (0.21 ) $ 0.65 -132.3 % $ 0.68 $ 1.74 -60.9 %
Weighted average number of shares and
equivalent shares (in millions) – Diluted 41.9 41.7 0.5 % 41.9 41.6 0.7 %
 

RETURN ON EQUITY

Net income return on equity (1) 1.3 % 12.3 %
Core return on equity excluding net unrealized investment

gains on securities and re-measurement of DTL (2)

2.3 % 6.4 %
 

FINANCIAL POSITION

Per share (3):
Book value $ 31.50 $ 36.88 -14.6 %
Effect of net unrealized investment gains

on securities (4)

$ 2.37 $ 7.37 -67.8 %
Effect of the re-measurement of net DTL $ $ 2.43 -100.0 %
Dividends paid $ 0.285 $ 0.275 3.6 % $ 1.140 $ 1.100 3.6 %
Ending number of shares outstanding (in millions) (3) 41.0 40.7 0.7 %
Total assets $ 11,031.9 $ 11,198.3 -1.5 %
Long-term debt, current and noncurrent 297.7 297.5 0.1 %
Total shareholders’ equity 1,290.6 1,501.6 -14.1 %
 

ADDITIONAL INFORMATION

Net investment gains (losses)
Before tax $ (14.4 ) $ (1.7 ) N.M. $ (12.5 ) $ (3.4 ) N.M.
After tax (11.6 ) (0.9 ) N.M. (10.1 ) (1.7 ) N.M.
Per share, diluted $ (0.28 ) $ (0.02 ) N.M. $ (0.24 ) $ (0.04 ) N.M.
 

N.M.- Not meaningful.

(1)   Based on trailing 12-month net income and average quarter-end
shareholders’ equity.
(2) Based on trailing 12-month 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 40,969,885 at December 31, 2018 and
40,717,873 at December 31, 2017.
(4) Net of the related impact on deferred policy acquisition costs and
applicable deferred taxes.
 
HORACE MANN EDUCATORS CORPORATION

Statements of Operations and Supplemental Consolidated Data
(Unaudited)

($ in Millions)

 
  Three Months Ended     Twelve Months Ended  
December 31, December 31,

2018

 

2017

Change

2018

 

2017

Change

STATEMENTS OF OPERATIONS

Insurance premiums and contract charges earned $ 201.9 $ 204.3 -1.2 % $ 817.3 $ 794.7 2.8 %
Net investment income 88.4 98.6 -10.3 % 376.5 373.6 0.8 %
Net investment gains (losses) (14.4 ) (1.7 ) N.M. (12.5 ) (3.4 ) N.M.
Other income 2.6 1.8 44.4 % 10.3 6.6 56.1 %
Total revenues 278.5 303.0 -8.1 % 1,191.6 1,171.5 1.7 %
 
Benefits, claims and settlement expenses 163.9 137.4 19.3 % 637.6 582.3 9.5 %
Interest credited 53.0 50.4 5.2 % 206.2 198.6 3.8 %
Policy acquisition expenses amortized 30.5 28.3 7.8 % 109.9 102.2 7.5 %
Operating expenses 56.0 48.7 15.0 % 205.4 187.8 9.4 %
Interest expense 3.3 3.0 10.0 % 13.0 11.9 9.2 %
Total benefits, losses and expenses 306.7 267.8 14.5 % 1,172.1 1,082.8 8.2 %
 
Income (loss) before income taxes (28.2 ) 35.2 N.M. 19.5 88.7 -78.0 %
Income tax expense (benefit) (7.9 ) (90.1 ) -91.2 % 1.2 (80.7 ) -101.5 %
Net income (loss) $ (20.3 ) $ 125.3 -116.2 % $ 18.3 $ 169.4 -89.2 %
 

PREMIUMS WRITTEN AND CONTRACT DEPOSITS

Property and Casualty $ 166.4 $ 164.8 1.0 % $ 681.5 $ 662.8 2.8 %
Annuity deposits 113.1 104.2 8.5 % 439.1 453.1 -3.1 %
Life 31.7 31.4 1.0 % 114.4 111.2 2.9 %
Total $ 311.2 $ 300.4 3.6 % $ 1,235.0 $ 1,227.1 0.6 %
 

SEGMENT NET INCOME (LOSS)

Property and Casualty $ (9.9 ) $ 15.6 N.M. $ (14.3 ) $ 17.8 N.M.
Retirement 4.1 51.5 -92.0 % 41.7 88.4 -52.8 %
Life 3.8 63.3 -94.0 % 18.8 77.6 -75.8 %
Corporate and Other (1) (18.3 ) (5.1 ) N.M. (27.9 ) (14.4 ) -93.8 %
Net income (loss) $ (20.3 ) $ 125.3 -116.2 % $ 18.3 $ 169.4 -89.2 %
 

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 4.
 
 
HORACE MANN EDUCATORS CORPORATION

Supplemental Business Segment Overview (Unaudited)

($ in Millions)

 
  Three Months Ended     Twelve Months Ended  
December 31, December 31,

2018

 

2017

Change

2018

 

2017

Change

PROPERTY & CASUALTY

Premiums written $ 166.4 $ 164.8 1.0 % $ 681.5 $ 662.8 2.8 %
Premiums earned 164.3 166.3 -1.2 % 665.7 648.3 2.7 %
Net investment income 7.9 9.7 -18.6 % 40.1 36.2 10.8 %
Other income (expense) 0.5 (0.2 ) N.M. 1.9 (0.2 ) N.M.
Losses and loss adjustment expenses (LAE) 140.0 111.4 25.7 % 547.7 496.3 10.4 %
Operating expenses (includes policy
acquisition expenses amortized) 46.1 44.9 2.7 % 179.8 173.4 3.7 %
Interest expense 0.3 0.1 N.M. 1.1 0.1 N.M.
Income (loss) before tax (13.7 ) 19.4 N.M. (20.9 ) 14.5 N.M.
Net income (loss) (9.9 ) 15.6 N.M. (14.3 ) 17.8 N.M.
Net investment income, after tax 6.9 7.7 -10.4 % 34.5 28.9 19.4 %
 
Catastrophe costs (1)
After tax 35.8 2.4 N.M. 90.1 40.2 124.1 %
Before tax 45.3 3.6 N.M. 114.1 61.8 84.6 %
Prior years’ reserves favorable (adverse)
development, before tax
Automobile 0.3 % 0.3 %
Property & other 0.3 -100.0 % 0.3 2.4 -87.5 %
Total 0.6 -100.0 % 0.3 2.7 -88.9 %
 
Operating statistics:
Loss and loss adjustment expense ratio 85.2 % 67.0 % 18.2 pts 82.3 % 76.6 % 5.7 pts
Expense ratio 28.1 % 27.0 % 1.1 pts 27.0 % 26.7 % 0.3 pts
Combined ratio 113.3 % 94.0 % 19.3 pts 109.3 % 103.3 % 6.0 pts
Effect on the combined ratio of:
Catastrophe costs (1) 27.0 % 2.2 % 24.8 pts 17.1 % 9.5 % 7.6 pts
Prior years’ (favorable) adverse reserve development % -0.4 % 0.4 pts % -0.4 % 0.4 pts
Combined ratio excluding the effects of
catastrophe costs and prior years’ reserve
development (underlying combined ratio)* 86.3 % 92.2 % -5.9 pts 92.2 % 94.2 % -2.0 pts
 
Policies in force (in thousands) 664 684 -2.9 %
Automobile 463 479 -3.3 %
Property 201 205 -2.0 %
 
Policy renewal rate – 12 months
Automobile 81.9 % 83.0 % -1.1 pts
Property 88.0 % 87.6 % +0.4 pts
 

N.M.- Not meaningful.

(1)   Includes allocated loss adjustment expenses and, when applicable,
catastrophe reinsurance reinstatement premiums.
 
 
HORACE MANN EDUCATORS CORPORATION

Supplemental Business Segment Overview (Unaudited)

($ in Millions)

 
  Three Months Ended     Twelve Months Ended  
December 31, December 31,

2018

 

2017

Change

2018

 

2017

Change

RETIREMENT

Contract deposits $ 113.1 $ 104.2 8.5 % $ 439.1 $ 453.1 -3.1 %
Variable 54.5 46.2 18.0 % 205.8 173.9 18.3 %
Fixed 58.6 58.0 1.0 % 233.3 279.2 -16.4 %
Contract charges earned 7.3 7.2 1.4 % 31.2 28.0 11.4 %
Net investment income 62.9 69.1 -9.0 % 262.6 262.0 0.2 %
Interest credited 41.7 39.1 6.6 % 161.1 153.5 5.0 %
Net interest margin (without net investment gains/losses) 21.2 30.0 -29.3 % 101.5 108.5 -6.5 %
Other income 1.7 1.8 -5.6 % 7.0 5.9 18.6 %
Mortality loss and other reserve changes (2.8 ) (1.8 ) 55.6 % (7.6 ) (5.8 ) 31.0 %
Operating expenses (includes policy acquisition expenses amortized) 23.7 19.5 21.5 % 80.4 67.6 18.9 %
Income before tax 3.7 17.7 -79.1 % 51.7 69.0 -25.1 %
Net income 4.1 51.5 -92.0 % 41.7 88.4 -52.8 %
Pretax income increase (decrease) due to evaluation of:
Deferred policy acquisition costs $ (3.8 ) $ (1.2 ) N.M. $ (3.9 ) $ (1.1 ) N.M.
Guaranteed minimum death benefit reserve (0.1 ) 0.1 % (0.1 ) 0.1 %
Retirement contracts in force (in thousands) 226 223 1.3 %
Annuity accumulated account value on deposit /
Assets under management $ 6,713.3 $ 6,764.0 (0.7 %)
Variable 2,001.1 2,152.0 (7.0 %)
Fixed 4,712.2 4,612.0 2.2 %
Annuity accumulated value retention – 12 months
Variable accumulations 94.4 % 94.8 % -0.4 pts
Fixed accumulations 94.0 % 94.5 % -0.5 pts
 

LIFE

Premiums and contract deposits $ 31.7 $ 31.4 1.0 % $ 114.4 $ 111.2 2.9 %
Premiums and contract charges earned 30.3 30.8 -1.6 % 120.4 118.4 1.7 %
Net investment income 17.8 20.0 -11.0 % 74.4 76.2 -2.4 %
Other income 0.1 0.1 % 0.3 0.4 -25.0 %
Death benefits/mortality cost/change in reserves 21.1 24.2 -12.8 % 82.3 80.2 2.6 %
Interest credited 11.3 11.3 % 45.1 45.1 %
Operating expenses (includes policy acquisition expenses amortized) 11.1 11.2 -0.9 % 44.0 44.0 %
Income before tax 4.7 4.2 11.9 % 23.7 25.7 -7.8 %
Net income 3.8 63.3 -94.0 % 18.8 77.6 -75.8 %
Pretax income increase (decrease) due to evaluation of:
Deferred policy acquisition costs $ (0.1 ) $ N.M. $ (0.3 ) $ 0.2 N.M.
Life policies in force (in thousands) 199 198 0.5 %
Life insurance in force $ 18,278 $ 17,564 4.1 %
Lapse ratio – 12 months (Ordinary life insurance) 4.6 % 4.9 % -0.3 pts
 

CORPORATE AND OTHER (1)

Components of income (loss) before tax:
Net investment gains (losses) $ (14.4 ) $ (1.7 ) N.M. $ (12.5 ) $ (3.4 ) N.M.
Interest expense (3.0 ) (2.9 ) 3.4 % (11.9 ) (11.8 ) 0.8 %
Other operating expenses, net investment income and other income (5.5 ) (1.6 ) N.M. (10.6 ) (5.3 ) 100.0 %
Loss before tax (22.9 ) (6.1 ) N.M. (35.0 ) (20.5 ) 70.7 %
Net loss (18.3 ) (5.1 ) N.M. (27.9 ) (14.4 ) -93.8 %
 

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.
 
 
HORACE MANN EDUCATORS CORPORATION

Supplemental Business Segment Overview (Unaudited)

($ in Millions)

       
Three Months Ended Twelve Months Ended
December 31, December 31,

2018

 

2017

Change

2018

 

2017

Change

INVESTMENTS

Retirement and Life
Fixed maturity securities, at fair value (amortized
cost 2018, $6,569.3; 2017, $6,490.8) $ 6,703.7 $ 6,874.1 -2.5 %
Equity securities, at fair value (cost 2017, $77.5) 73.4 80.9 -9.3 %
Short-term investments 97.9 36.4 N.M.
Policy loans 154.0 153.6 0.3 %
Other investments 265.5   203.7   30.3 %
Total Retirement and Life investments 7,294.5 7,348.7 -0.7 %
 
Property & Casualty
Fixed maturity securities, at fair value (amortized
cost 2018, $804.6; 2017, $812.1) 811.6 850.0 -4.5 %
Equity securities, at fair value (cost 2017, $38.8) 38.4 54.6 -29.7 %
Short-term investments 19.0 19.3 -1.6 %
Other investments 81.8   72.9   12.2 %
Total Property & Casualty investments 950.8 996.8 -4.6 %
 
Corporate investments 5.4 6.8 -20.6 %
 
Total investments 8,250.7 8,352.3 -1.2 %
 
Net investment income
Before tax $ 88.4 $ 98.6 -10.3 % $ 376.5 $ 373.6 0.8 %
After tax 70.6 65.5 7.8 % 300.3 248.3 20.9 %
 

N.M.- Not meaningful.

 

Contacts

Horace Mann Educators Corporation
Heather J. Wietzel
Vice
President, Investor Relations
217-788-5144
investorrelation[email protected]

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