-
Third-quarter combined ratio of 110% included 19 points of catastrophe
losses; underlying auto loss ratio* improved 3.1 points compared to
the prior year quarter
-
18% growth in Retirement sales, illustrating strong market response to
fee-based product offerings
-
66% increase in third-quarter Life sales, reflecting gains across all
products types
-
Full-year 2018 guidance updated to reflect third-quarter catastrophe
losses
-
Acquisition of Benefit Consultants Group to expand strategic
capabilities in retirement market
SPRINGFIELD, Ill.--(BUSINESS WIRE)--
Horace Mann Educators Corporation (NYSE:HMN) today reported financial
results for the three and nine-month periods ended September 30, 2018:
| |
|
| Horace Mann Financial Highlights |
| |
|
|
| Three Months Ended
September 30, 2018 |
| Nine Months Ended
September 30, 2018 |
| ($ in millions, except per share amounts) | | 2018 |
| 2017 |
| Change | | 2018 |
| 2017 |
| Change |
| | | | | | | | | | | | | |
|
|
Total revenues
| |
$
|
311.4
| | |
$
|
289.8
| | |
7.5
|
%
| |
$
|
913.1
| | |
$
|
868.5
| | |
5.1
|
%
|
|
Net income
| |
12.5
| | |
26.5
| | |
-52.8
|
%
| |
38.6
| | |
44.1
| | |
-12.5
|
%
|
|
Net investment gains (losses) after tax
| |
2.2
|
| |
(2.2
|
)
| |
N.M.
| | |
1.5
|
| |
(0.8
|
)
| |
N.M.
| |
|
Core earnings
| |
10.3
| | |
28.7
| | |
-64.1
|
%
| |
37.1
| | |
44.9
| | |
-17.4
|
%
|
|
Per diluted share:
| | | | | | | | | | | | | | |
|
Net income
| |
0.30
| | |
0.64
| | |
-53.1
|
%
| |
0.93
| | |
1.06
| | |
-12.3
|
%
|
|
Net investment gains (losses) after tax
| |
0.05
|
| |
(0.05
|
)
| |
N.M.
| | |
0.04
|
| |
(0.02
|
)
| |
N.M.
| |
|
Core earnings per diluted share*
| |
0.25
| | |
0.69
| | |
-63.8
|
%
| |
0.89
| | |
1.08
| | |
-17.6
|
%
|
|
Book value per share
| | | | | | | | |
31.78
| | |
34.20
| | |
-7.1
|
%
|
|
Book value per share excluding net unrealized investment gains on
securities*
| | | | | | | | |
29.93
| | |
27.91
| | |
7.2
|
%
|
|
Property and Casualty net income (loss)
| |
(3.2
|
)
| |
13.4
| | |
-123.9
|
%
| |
(4.4
|
)
| |
2.2
| | |
N.M.
| |
|
Property and Casualty combined ratio
| |
110.1
|
%
| |
95.8
|
%
| |
14.3
|
pts
| |
108.0
|
%
| |
106.5
|
%
| |
1.5
|
pts
|
|
Property and Casualty underlying combined ratio*
| |
91.0
|
%
| |
90.8
|
%
| |
0.2
|
pts
| |
94.4
|
%
| |
94.9
|
%
| |
-0.5
|
pts
|
|
Retirement net income
| |
$
|
12.1
| | |
$
|
13.6
| | |
-11.0
|
%
| |
$
|
37.6
| | |
$
|
36.9
| | |
1.9
|
%
|
|
Life net income
| |
5.3
| | |
4.8
| | |
10.4
|
%
| |
15.0
| | |
14.3
| | |
4.9
|
%
|
|
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.
|
|
|
"Due to heavy catastrophes losses in the third quarter, we are revising
our estimate of full-year 2018 core earnings to between $1.45 and
$1.60," said Horace Mann President and CEO Marita Zuraitis. "It's
disappointing that weather will mask our continued strategic progress.
Our long-term goals of becoming the company of choice to provide
financial solutions to the education market and to return to a
double-digit ROE remain intact. This quarter, our Property and Casualty
segment once again saw sizable improvement in the underlying auto loss
ratio, and both our Retirement and Life segments saw double-digit sales
growth."
"This momentum, combined with strategic investments to expand our
product set, enhance our distribution channels and upgrade our
infrastructure, positions us well to significantly improve ROE as we
move into 2019 and beyond," Zuraitis added.
Horace Mann entered into a definitive agreement this week to buy
privately held retirement plan administrator Benefit Consultants Group,
based in Cherry Hill, NJ. BCG’s recordkeeping business and other
worksite capabilities strengthen Horace Mann's value proposition and
enhance its retirement plan infrastructure and offerings for school
districts. Horace Mann will pay $25 million for the company, and expects
the acquisition to close in the first half of 2019, pending regulatory
approval. The transaction will support Horace Mann’s growth over the
next three to five years. In the near term, it is not expected to be
material to EPS and ROE. The transaction is expected to be accretive in
the long term.
| |
|
| Property and Casualty Segment Shows Underlying Improvement in
Heavy Cat Quarter |
| (All comparisons vs. same period in 2017, unless noted otherwise) |
| |
|
|
| Three Months Ended
September 30, 2018 |
| Nine Months Ended
September 30, 2018 |
| ($ in millions) | | 2018 |
| 2017 |
| Change | | 2018 |
| 2017 |
| Change |
| | | | | | | | | | | | | |
|
|
Property and Casualty written premiums
| |
$
|
182.7
| | |
$
|
177.2
| | |
3.1
|
%
| |
$
|
515.1
| | |
$
|
498.0
| | |
3.4
|
%
|
|
Property and Casualty net income (loss)
| |
(3.2
|
)
| |
13.4
| | |
-123.9
|
%
| |
(4.4
|
)
| |
2.2
| | |
N.M.
| |
|
Property and Casualty combined ratio
| |
110.1
|
%
| |
95.8
|
%
| |
14.3
|
pts
| |
108.0
|
%
| |
106.5
|
%
| |
1.5
|
pts
|
|
Property and Casualty underlying loss ratio*
| |
63.9
|
%
| |
65.4
|
%
| |
-1.5
|
pts
| |
67.7
|
%
| |
68.2
|
%
| |
-0.5
|
pts
|
|
Property and Casualty expense ratio
| |
27.1
|
%
| |
25.4
|
%
| |
1.7
|
pts
| |
26.7
|
%
| |
26.7
|
%
| |
—
|
pts
|
|
Property and Casualty catastrophe losses
| |
19.1
|
%
| |
5.3
|
%
| |
13.8
|
pts
| |
13.7
|
%
| |
12.0
|
%
| |
1.7
|
pts
|
Property and Casualty underlying combined ratio*
| |
91.0
|
%
| |
90.8
|
%
| |
+0.2
|
pts
| |
94.4
|
%
| |
94.9
|
%
| |
-0.5
|
pts
|
|
Auto combined ratio
| |
99.5
|
%
| |
103.4
|
%
| |
-3.9
|
pts
| |
103.4
|
%
| |
107.0
|
%
| |
-3.6
|
pts
|
|
Auto underlying loss ratio*
| |
71.4
|
%
| |
74.5
|
%
| |
-3.1
|
pts
| |
75.1
|
%
| |
77.0
|
%
| |
-1.9
|
pts
|
|
Property combined ratio
| |
133.3
|
%
| |
79.9
|
%
| |
+53.4
|
pts
| |
117.9
|
%
| |
105.6
|
%
| |
+12.3
|
pts
|
|
Property underlying loss ratio*
| |
48.0
|
%
| |
46.3
|
%
| |
+1.7
|
pts
| |
51.5
|
%
| |
49.7
|
%
| |
+1.8
|
pts
|
| | | | | | | | | | | | | | | | | |
|
For the third quarter of 2018, the Property and Casualty combined ratio
was 110.1%, with catastrophe losses adding 19.1 points to the ratio, as
previously disclosed. Significant events in the quarter included
Hurricane Florence, a major hailstorm in Colorado and the Carr Wildfire
in California.
The underlying auto loss ratio improved 1.9 points for first nine months
of 2018, reflecting the accelerating impact of rate actions and
underwriting initiatives to improve profitability. The underlying
property loss ratio rose on elevated non-catastrophe weather-related
losses.
Written premiums* increased 3.1% for the quarter, driven primarily by
rate actions. Policy retention continues to be stable with auto and
property policy retention rates for the current quarter at 82.5% and
87.9%, respectively.
|
|
| Retirement Segment Sales Increase 18% Over a Year Ago |
| (All comparisons vs. same period in 2017, unless noted otherwise) |
|
|
|
| Three Months Ended
September 30, 2018 |
| Nine Months Ended
September 30, 2018 |
| ($ in millions) | | 2018 |
| 2017 |
| Change | | 2018 |
| 2017 |
| Change |
| | | | | | | | | | | |
|
|
Retirement sales deposits*
| |
$
|
151.9
| | |
$
|
128.5
| | |
18.2
|
%
| |
$
|
383.6
| | |
$
|
371.9
| | |
3.1
|
%
|
|
Retirement assets under management
| | | | | | | |
7,121.0
| | |
6,680.0
| | |
6.6
|
%
|
|
Retirement net income
| |
12.1
| | |
13.6
| | |
-11.0
|
%
| |
37.6
| | |
36.9
| | |
1.9
|
%
|
|
Retirement net income excluding DAC
unlocking*
| |
11.9
| | |
13.2
| | |
-9.8
|
%
| |
37.7
| | |
36.9
| | |
2.2
|
%
|
| | | | | | | | | | | | | | | | | |
|
For the third quarter of 2018, Retirement sales deposits increased by
18.2%, attributable to the increase in fee-based Retirement product
sales as educators continue to respond favorably to the enhanced product
lineup. For the nine months, sales deposits increased by 3.1% over prior
year, with the increase in fee-based deposits partially offset by a
decline in spread-based deposits.
Sales deposit activity related to the Retirement Advantage® mutual
fund products, as well as other mutual fund offerings, reached $57.6
million year-to-date, compared to $29.0 million prior year-to-date.
Retirement assets under management increased 6.6% compared to a year
ago, and total cash value persistency remained strong at 94.5% for
variable annuities and 94.2% for fixed annuities.
Net income excluding DAC unlocking decreased 9.8% for the quarter on
higher operating expenses to support strategic initiatives, while
increasing 2.2% for the nine months.
The annualized net interest spread on fixed annuity assets under
management of $4.7 billion for the third quarter of 2018 was 182 basis
points, primarily benefiting from an elevated level of prepayment
activity.
|
|
| Life Segment Reports Double-Digit Sales Increases |
| (All comparisons vs. same period in 2017, unless noted otherwise) |
|
|
|
| Three Months Ended
September 30, 2018 |
| Nine Months Ended
September 30, 2018 |
| ($ in millions) | | 2018 |
| 2017 |
| Change | | 2018 |
| 2017 |
| Change |
| | | | | | | | | | | |
|
|
Life sales
| |
$
|
5.3
| | |
$
|
3.2
| | |
65.6
|
%
| |
$
|
15.1
| | |
$
|
11.6
| | |
30.2
|
%
|
|
Life mortality costs
| |
8.7
| | |
8.2
| | |
6.1
|
%
| |
25.9
| | |
24.2
| | |
7.0
|
%
|
|
Life net income
| |
5.3
| | |
4.8
| | |
10.4
|
%
| |
15.0
| | |
14.3
| | |
4.9
|
%
|
| | | | | | | | | | | | | | | |
|
Life sales* increased $2.1 million, or 65.6%, for the third quarter,
reflecting an increased emphasis on meeting the needs of the
under-insured educator market through enhanced marketing efforts and
ease of doing business improvements. For the nine months, Life sales
rose $3.5 million, or 30.2%.
Life net income increased 10.4% in the third quarter and 4.9% in the
full year, benefiting from the lower federal income tax rate.
Third-quarter mortality costs compared favorably with actuarial
assumptions. Life persistency of 95.2% was comparable to 12 months
earlier.
|
|
| Net Investment Income Up Over Prior Year |
| (All comparisons vs. same period in 2017, unless noted otherwise) |
|
|
|
| Three Months Ended
September 30, 2018 |
| Nine Months Ended
September 30, 2018 |
| ($ in millions) | | 2018 |
| 2017 |
| Change | | 2018 |
| 2017 |
| Change |
| | | | | | | | | | | |
|
|
Total net investment income
| |
$
|
99.1
| | |
$
|
92.3
| | |
7.4
|
%
| |
$
|
288.1
| | |
$
|
275.0
| | |
4.8
|
%
|
|
Pretax net investment gains (losses)
| |
2.9
| | |
(3.5
|
)
| |
N.M.
| |
1.9
| | |
(1.7
|
)
| |
N.M.
|
Pretax net unrealized investment
gains (losses) on securities
| | | | | | | |
109.6
| | |
455.3
| | |
-75.9
|
%
|
| | | | | | | | | | | | | | |
|
While annuity asset balances in the Retirement segment continue to grow,
annual investment yields continue to be impacted by the low interest
rate environment of recent years. Third-quarter total net investment
income increased 7.4% primarily due to higher than anticipated
prepayment activity and favorable returns on alternative investments.
Net unrealized investment gains were down compared to a year ago,
largely because of rising interest rates and slightly wider credit
spreads in the investment-grade fixed maturity securities portfolio.
Capital Management Strategy Remains Unchanged
As of September 30, 2018, $27.8 million remained authorized for future
share repurchases under the share repurchase program.
Quarterly Webcast
Horace Mann’s senior management will discuss the company’s third quarter
financial results with investors and analysts on October 31, 2018 at 9
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 June 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 September 30,
|
| |
|
Nine Months Ended September 30,
|
| |
| | 2018 |
| 2017 | | Change | | 2018 |
| 2017 | | Change |
EARNINGS SUMMARY | | | | | | | | | | | | |
|
Net income
| |
$
|
12.5
| | |
$
|
26.5
| | |
-52.8
|
%
| |
$
|
38.6
| | |
$
|
44.1
| | |
-12.5
|
%
|
|
Net investment gains (losses), after tax
| |
2.2
| | |
(2.2
|
)
| |
N.M.
| |
1.5
| | |
(0.8
|
)
| |
N.M.
|
|
Core earnings*
| |
10.3
| | |
28.7
| | |
-64.1
|
%
| |
37.1
| | |
44.9
| | |
-17.4
|
%
|
| | | | | | | | | | | |
|
|
Per diluted share:
| | | | | | | | | | | | |
|
Net income
| |
$
|
0.30
| | |
$
|
0.64
| | |
-53.1
|
%
| |
$
|
0.93
| | |
$
|
1.06
| | |
-12.3
|
%
|
|
Net investment gains (losses), after tax
| |
$
|
0.05
| | |
$
|
(0.05
|
)
| |
N.M.
| |
$
|
0.04
| | |
$
|
(0.02
|
)
| |
N.M.
|
|
Core earnings*
| |
$
|
0.25
| | |
$
|
0.69
| | |
-63.8
|
%
| |
$
|
0.89
| | |
$
|
1.08
| | |
-17.6
|
%
|
|
Weighted average number of shares and
equivalent shares (in millions) - Diluted
| |
41.9
| | |
41.6
| | |
0.7
|
%
| |
41.7
| | |
41.5
| | |
0.5
|
%
|
| | | | | | | | | | | |
|
RETURN ON EQUITY | | | | | | | | | | | | |
|
Net income return on equity (A)
| | | | | | | |
11.8
|
%
| |
4.7
|
%
| | |
|
Core return on equity excluding net
unrealized investment gains on securities (B)
| | | | | | | |
5.3
|
%
| |
5.9
|
%
| | |
| | | | | | | | | | | |
|
FINANCIAL POSITION | | | | | | | | | | | | |
|
Per share (C):
| | | | | | | | | | | | |
|
Book value
| | | | | | | |
$
|
31.78
| | |
$
|
34.20
| | |
-7.1
|
%
|
|
Effect of net unrealized investment gains on securities (D)
| | | | | | | |
$
|
1.85
| | |
$
|
6.29
| | |
-70.6
|
%
|
|
Dividends paid
| |
$
|
0.285
| | |
$
|
0.275
| | |
3.6
|
%
| |
$
|
0.855
| | |
$
|
0.825
| | |
3.6
|
%
|
|
Ending number of shares outstanding
(in millions) (C)
| | | | | | | |
41.0
| | |
40.7
| | |
0.7
|
%
|
|
Total assets
| | | | | | | |
$
|
11,280.8
| | |
$
|
11,044.3
| | |
2.1
|
%
|
|
Long-term debt, current and noncurrent
| | | | | | | |
297.7
| | |
247.4
| | |
20.3
|
%
|
|
Total shareholders' equity
| | | | | | | |
1,304.3
| | |
1,390.4
| | |
-6.2
|
%
|
| | | | | | | | | | | |
|
ADDITIONAL INFORMATION | | | | | | | | | | | | |
|
Net investment gains (losses)
| | | | | | | | | | | | |
|
Before tax
| |
$
|
2.9
| | |
$
|
(3.5
|
)
| |
N.M.
| |
$
|
1.9
| | |
$
|
(1.7
|
)
| |
N.M.
|
|
After tax
| |
2.2
| | |
(2.2
|
)
| |
N.M.
| |
1.5
| | |
(0.8
|
)
| |
N.M.
|
|
Per share, diluted
| |
$
|
0.05
| | |
$
|
(0.05
|
)
| |
N.M.
| |
$
|
0.04
| | |
$
|
(0.02
|
)
| |
N.M.
|
|
(A)
|
|
Based on trailing 12-month net income and average quarter-end
shareholders' equity.
|
|
(B)
| |
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.
|
|
(C)
| |
Ending shares outstanding were 41,040,746 at September 30, 2018 and
40,661,505 at September 30, 2017.
|
|
(D)
| |
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 September 30,
|
| |
|
Nine Months Ended September 30,
|
| |
| | 2018 |
| 2017 | | Change | | 2018 |
| 2017 | | Change |
STATEMENTS OF OPERATIONS | | | | | | | | | | | | |
|
Insurance premiums and contract charges earned
| |
$
|
206.8
| | |
$
|
199.0
| | |
3.9
|
%
| |
$
|
615.4
| | |
$
|
590.4
| | |
4.2
|
%
|
|
Net investment income
| |
99.1
| | |
92.3
| | |
7.4
|
%
| |
288.1
| | |
275.0
| | |
4.8
|
%
|
|
Net investment gains (losses)
| |
2.9
| | |
(3.5
|
)
| |
N.M.
| |
1.9
| | |
(1.7
|
)
| |
N.M.
|
|
Other income
| |
2.6
| | |
2.0
| | |
30.0
|
%
| |
7.7
| | |
4.8
| | |
60.4
|
%
|
|
Total revenues
| |
311.4
| | |
289.8
| | |
7.5
|
%
| |
913.1
| | |
868.5
| | |
5.1
|
%
|
| | | | | | | | | | | |
|
|
Benefits, claims and settlement expenses
| |
161.8
| | |
134.9
| | |
19.9
|
%
| |
473.7
| | |
444.9
| | |
6.5
|
%
|
|
Interest credited
| |
52.1
| | |
50.1
| | |
4.0
|
%
| |
153.2
| | |
148.2
| | |
3.4
|
%
|
|
Policy acquisition expenses amortized
| |
26.2
| | |
24.2
| | |
8.3
|
%
| |
79.4
| | |
73.9
| | |
7.4
|
%
|
|
Operating expenses
| |
51.0
| | |
44.2
| | |
15.4
|
%
| |
149.4
| | |
139.1
| | |
7.4
|
%
|
|
Interest expense
| |
3.2
| | |
3.0
| | |
6.7
|
%
| |
9.7
| | |
8.9
| | |
9.0
|
%
|
|
Total benefits, losses and expenses
| |
294.3
| | |
256.4
| | |
14.8
|
%
| |
865.4
| | |
815.0
| | |
6.2
|
%
|
| | | | | | | | | | | |
|
|
Income before income taxes
| |
17.1
| | |
33.4
| | |
-48.8
|
%
| |
47.7
| | |
53.5
| | |
-10.8
|
%
|
|
Income tax expense
| |
4.6
| | |
6.9
| | |
-33.3
|
%
| |
9.1
| | |
9.4
| | |
-3.2
|
%
|
|
Net income
| |
$
|
12.5
| | |
$
|
26.5
| | |
-52.8
|
%
| |
$
|
38.6
| | |
$
|
44.1
| | |
-12.5
|
%
|
| | | | | | | | | | | |
|
PREMIUMS WRITTEN AND CONTRACT DEPOSITS | | | | | | | | | | |
|
Property and Casualty
| |
$
|
182.7
| | |
$
|
177.2
| | |
3.1
|
%
| |
$
|
515.1
| | |
$
|
498.0
| | |
3.4
|
%
|
|
Annuity deposits
| |
127.0
| | |
114.8
| | |
10.6
|
%
| |
326.0
| | |
348.9
| | |
-6.6
|
%
|
|
Life
| |
28.4
| | |
26.4
| | |
7.6
|
%
| |
82.7
| | |
79.8
| | |
3.6
|
%
|
|
Total
| |
$
|
338.1
| | |
$
|
318.4
| | |
6.2
|
%
| |
$
|
923.8
| | |
$
|
926.7
| | |
-0.3
|
%
|
| | | | | | | | | | | |
|
SEGMENT NET INCOME (LOSS) | | | | | | | | | | | | |
|
Property and Casualty
| |
$
|
(3.2
|
)
| |
$
|
13.4
| | |
-123.9
|
%
| |
$
|
(4.4
|
)
| |
$
|
2.2
| | |
N.M.
|
|
Retirement
| |
12.1
| | |
13.6
| | |
-11.0
|
%
| |
37.6
| | |
36.9
| | |
1.9
|
%
|
|
Life
| |
5.3
| | |
4.8
| | |
10.4
|
%
| |
15.0
| | |
14.3
| | |
4.9
|
%
|
|
Corporate and Other (A)
| |
(1.7
|
)
| |
(5.3
|
)
| |
-67.9
|
%
| |
(9.6
|
)
| |
(9.3
|
)
| |
-3.2
|
%
|
|
Net income
| |
$
|
12.5
| | |
$
|
26.5
| | |
-52.8
|
%
| |
$
|
38.6
| | |
$
|
44.1
| | |
-12.5
|
%
|
|
(A)
|
|
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 September 30,
|
| |
|
Nine Months Ended September 30,
|
| |
| | 2018 |
| 2017 | | Change | | 2018 |
| 2017 | | Change |
PROPERTY & CASUALTY | | | | | | | | | | | | |
|
Premiums written
| |
$
|
182.7
| | |
$
|
177.2
| | |
3.1
|
%
| |
$
|
515.1
| | |
$
|
498.0
| | |
3.4
|
%
|
|
Premiums earned
| |
168.6
| | |
163.2
| | |
3.3
|
%
| |
501.4
| | |
482.0
| | |
4.0
|
%
|
|
Net investment income
| |
12.4
| | |
9.2
| | |
34.8
|
%
| |
32.2
| | |
26.5
| | |
21.5
|
%
|
|
Other income (expense)
| |
0.4
| | |
(0.1
|
)
| |
N.M.
| |
1.4
| | |
—
| | |
N.M.
|
|
Losses and loss adjustment expenses (LAE)
| |
140.0
| | |
114.9
| | |
21.8
|
%
| |
407.7
| | |
384.9
| | |
5.9
|
%
|
|
Operating expenses (includes policy
acquisition expenses amortized)
| |
45.8
| | |
41.4
| | |
10.6
|
%
| |
133.7
| | |
128.5
| | |
4.0
|
%
|
|
Interest expense
| |
0.3
| | |
—
| | |
N.M.
| |
0.8
| | |
—
| | |
N.M.
|
|
Income (loss) before tax
| |
(4.7
|
)
| |
16.0
| | |
-129.4
|
%
| |
(7.2
|
)
| |
(4.9
|
)
| |
-46.9
|
%
|
|
Net income (loss)
| |
(3.2
|
)
| |
13.4
| | |
-123.9
|
%
| |
(4.4
|
)
| |
2.2
| | |
N.M.
|
|
Net investment income, after tax
| |
10.5
| | |
7.3
| | |
43.8
|
%
| |
27.6
| | |
21.2
| | |
30.2
|
%
|
| | | | | | | | | | | |
|
|
Catastrophe losses (A)
| | | | | | | | | | | | |
|
After tax
| |
25.4
| | |
5.6
| | |
N.M.
| |
54.3
| | |
37.8
| | |
43.7
|
%
|
|
Before tax
| |
32.2
| | |
8.6
| | |
N.M.
| |
68.8
| | |
58.2
| | |
18.2
|
%
|
|
Prior years' reserves favorable (adverse)
development, before tax
| | | | | | | | | | | | |
|
Automobile
| |
—
| | |
—
| | |
—
|
%
| |
—
| | |
—
| | |
—
|
%
|
|
Property & other
| |
—
| | |
0.5
| | |
-100.0
|
%
| |
0.3
| | |
2.1
| | |
-85.7
|
%
|
|
Total
| |
—
| | |
0.5
| | |
-100.0
|
%
| |
0.3
| | |
2.1
| | |
-85.7
|
%
|
| | | | | | | | | | | |
|
|
Operating statistics:
| | | | | | | | | | | | |
|
Loss and loss adjustment expense ratio
| |
83.0
|
%
| |
70.4
|
%
| |
12.6
|
pts
| |
81.3
|
%
| |
79.8
|
%
| |
1.5
|
pts
|
|
Expense ratio
| |
27.1
|
%
| |
25.4
|
%
| |
1.7
|
pts
| |
26.7
|
%
| |
26.7
|
%
| |
—
|
pts
|
|
Combined ratio
| |
110.1
|
%
| |
95.8
|
%
| |
14.3
|
pts
| |
108.0
|
%
| |
106.5
|
%
| |
1.5
|
pts
|
|
Effect on the combined ratio of:
| | | | | | | | | | | | |
|
Catastrophe losses (A)
| |
19.1
|
%
| |
5.3
|
%
| |
13.8
|
pts
| |
13.7
|
%
| |
12.0
|
%
| |
1.7
|
pts
|
|
Prior years' (favorable) adverse reserve development
| |
—
|
%
| |
-0.3
|
%
| |
0.3
|
pts
| |
-0.1
|
%
| |
-0.4
|
%
| |
0.3
|
pts
|
|
Combined ratio excluding the effects of
catastrophe costs and prior years' reserve
development (underlying combined ratio)*
| |
91.0
|
%
| |
90.8
|
%
| |
0.2
|
pts
| |
94.4
|
%
| |
94.9
|
%
| |
-0.5
|
pts
|
| | | | | | | | | | | |
|
|
Policies in force (in thousands)
| | | | | | | |
668
| | |
688
| | |
-2.9
|
%
|
|
Automobile
| | | | | | | |
466
| | |
482
| | |
-3.3
|
%
|
|
Property
| | | | | | | |
202
| | |
206
| | |
-1.9
|
%
|
| | | | | | | | | | | |
|
|
Policy renewal rate - 12 months
| | | | | | | | | | | | |
|
Automobile
| | | | | | | |
82.5
|
%
| |
83.0
|
%
| |
-0.5
|
pts
|
|
Property
| | | | | | | |
87.9
|
%
| |
87.6
|
%
| |
+0.3
|
pts
|
|
(A)
|
|
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 September 30,
|
| |
|
Nine Months Ended September 30,
|
| |
| | 2018 |
| 2017 | | Change | | 2018 |
| 2017 | | Change |
RETIREMENT | | | | | | | | | | | | |
|
Contract deposits
| |
$
|
127.0
| | |
$
|
114.8
| | |
10.6
|
%
| |
$
|
326.0
| | |
$
|
348.9
| | |
-6.6
|
%
|
|
Variable
| |
53.8
| | |
38.6
| | |
39.4
|
%
| |
151.3
| | |
127.7
| | |
18.5
|
%
|
|
Fixed
| |
73.2
| | |
76.2
| | |
-3.9
|
%
| |
174.7
| | |
221.2
| | |
-21.0
|
%
|
|
Contract charges earned
| |
8.0
| | |
7.5
| | |
6.7
|
%
| |
23.9
| | |
20.8
| | |
14.9
|
%
|
|
Net investment income
| |
67.7
| | |
64.3
| | |
5.3
|
%
| |
199.7
| | |
192.9
| | |
3.5
|
%
|
|
Interest credited
| |
40.8
| | |
38.8
| | |
5.2
|
%
| |
119.4
| | |
114.4
| | |
4.4
|
%
|
|
Net interest margin (without net investment gains/losses)
| |
26.9
| | |
25.5
| | |
5.5
|
%
| |
80.3
| | |
78.5
| | |
2.3
|
%
|
|
Other income
| |
1.8
| | |
1.7
| | |
5.9
|
%
| |
5.3
| | |
4.1
| | |
29.3
|
%
|
|
Mortality loss and other reserve changes
| |
(1.5
|
)
| |
(1.6
|
)
| |
-6.3
|
%
| |
(4.8
|
)
| |
(4.0
|
)
| |
20.0
|
%
|
|
Operating expenses (includes policy acquisition expenses amortized)
| |
18.4
| | |
15.1
| | |
21.9
|
%
| |
56.7
| | |
48.1
| | |
17.9
|
%
|
|
Income before tax
| |
16.8
| | |
18.0
| | |
-6.7
|
%
| |
48.0
| | |
51.3
| | |
-6.4
|
%
|
|
Net income
| |
12.1
| | |
13.6
| | |
-11.0
|
%
| |
37.6
| | |
36.9
| | |
1.9
|
%
|
|
Pretax income increase (decrease) due to evaluation of:
| | | | | | | | | | | | |
|
Deferred policy acquisition costs
| |
$
|
0.3
| | |
$
|
0.7
| | |
-57.1
|
%
| |
$
|
(0.1
|
)
| |
$
|
0.1
| | |
N.M.
|
|
Guaranteed minimum death benefit reserve
| |
—
| | |
—
| | |
—
|
%
| |
—
| | |
—
| | |
—
|
%
|
|
Retirement contracts in force (in thousands)
| | | | | | | |
224
| | |
221
| | |
1.4
|
%
|
|
Annuity accumulated account value on deposit /
Assets under management
| | | | | | | |
$
|
6,997.7
| | |
$
|
6,634.1
| | |
5.5
|
%
|
|
Variable
| | | | | | | |
2,292.5
| | |
2,051.5
| | |
11.7
|
%
|
|
Fixed
| | | | | | | |
4,705.2
| | |
4,582.6
| | |
2.7
|
%
|
|
Annuity accumulated value retention - 12 months
| | | | | | | | | | | | |
|
Variable accumulations
| | | | | | | |
94.5
|
%
| |
95.0
|
%
| |
-0.5
|
pts
|
|
Fixed accumulations
| | | | | | | |
94.2
|
%
| |
94.5
|
%
| |
-0.3
|
pts
|
| | | | | | | | | | | |
|
LIFE | | | | | | | | | | | | |
|
Premiums and contract deposits
| |
$
|
28.4
| | |
$
|
26.4
| | |
7.6
|
%
| |
$
|
82.7
| | |
$
|
79.8
| | |
3.6
|
%
|
|
Premiums and contract charges earned
| |
30.2
| | |
28.3
| | |
6.7
|
%
| |
90.1
| | |
87.6
| | |
2.9
|
%
|
|
Net investment income
| |
19.1
| | |
19.0
| | |
0.5
|
%
| |
56.6
| | |
56.2
| | |
0.7
|
%
|
|
Other income
| |
0.1
| | |
0.1
| | |
—
|
%
| |
0.2
| | |
0.3
| | |
-33.3
|
%
|
|
Death benefits/mortality cost/change in reserves
| |
20.3
| | |
18.4
| | |
10.3
|
%
| |
61.2
| | |
56.0
| | |
9.3
|
%
|
|
Interest credited
| |
11.3
| | |
11.3
| | |
—
|
%
| |
33.8
| | |
33.8
| | |
—
|
%
|
|
Operating expenses (includes policy acquisition expenses amortized)
| |
10.8
| | |
10.3
| | |
4.9
|
%
| |
32.9
| | |
32.8
| | |
0.3
|
%
|
|
Income before tax
| |
7.0
| | |
7.4
| | |
-5.4
|
%
| |
19.0
| | |
21.5
| | |
-11.6
|
%
|
|
Net income
| |
5.3
| | |
4.8
| | |
10.4
|
%
| |
15.0
| | |
14.3
| | |
4.9
|
%
|
|
Pretax income increase (decrease) due to evaluation of:
| | | | | | | | | | | | |
|
Deferred policy acquisition costs
| |
$
|
(0.1
|
)
| |
$
|
—
| | |
N.M.
| |
$
|
(0.2
|
)
| |
$
|
0.2
| | |
N.M.
|
|
Life policies in force (in thousands)
| | | | | | | |
198
| | |
197
| | |
0.5
|
%
|
|
Life insurance in force
| | | | | | | |
$
|
18,054
| | |
$
|
17,403
| | |
3.7
|
%
|
|
Lapse ratio - 12 months (Ordinary life insurance)
| | | | | | | |
4.8
|
%
| |
4.7
|
%
| |
0.1
|
pts
|
| | | | | | | | | | | |
|
CORPORATE AND OTHER (A) | | | | | | | | | | | | |
|
Components of income (loss) before tax:
| | | | | | | | | | | | |
|
Net investment gains (losses)
| |
$
|
2.9
| | |
$
|
(3.5
|
)
| |
N.M.
| |
$
|
1.9
| | |
$
|
(1.7
|
)
| |
N.M.
|
|
Interest expense
| |
(2.9
|
)
| |
(3.0
|
)
| |
-3.3
|
%
| |
(8.9
|
)
| |
(8.9
|
)
| |
—
|
%
|
|
Other operating expenses, net investment income and other income
| |
(2.0
|
)
| |
(1.5
|
)
| |
33.3
|
%
| |
(5.1
|
)
| |
(3.8
|
)
| |
34.2
|
%
|
|
Loss before tax
| |
(2.0
|
)
| |
(8.0
|
)
| |
-75.0
|
%
| |
(12.1
|
)
| |
(14.4
|
)
| |
-16.0
|
%
|
|
Net loss
| |
(1.7
|
)
| |
(5.3
|
)
| |
-67.9
|
%
| |
(9.6
|
)
| |
(9.3
|
)
| |
-3.2
|
%
|
| | | | | | | | | | | | | | | | | |
|
|
(A)
|
|
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 September 30,
|
| |
|
Nine Months Ended September 30,
|
| |
| | 2018 |
| 2017 | | Change | | 2018 |
| 2017 | | Change |
INVESTMENTS | | | | | | | | | | | | |
|
Retirement and Life
| | | | | | | | | | | | |
|
Fixed maturity securities, at fair value (amortized
cost 2018, $6,579.1; 2017, $6,451.2)
| | | | | | | |
$
|
6,680.5
| | |
$
|
6,849.5
| | |
-2.5
|
%
|
|
Equity securities, at fair value (cost 2017, $80.3)
| | | | | | | |
76.7
| | |
83.6
| | |
-8.3
|
%
|
|
Short-term investments
| | | | | | | |
49.7
| | |
83.4
| | |
-40.4
|
%
|
|
Policy loans
| | | | | | | |
153.6
| | |
153.6
| | |
—
|
%
|
|
Other investments
| | | | | | | |
268.7
|
| |
212.4
|
| |
26.5
|
%
|
|
Total Retirement and Life investments
| | | | | | | |
7,229.2
| | |
7,382.5
| | |
-2.1
|
%
|
| | | | | | | | | | | |
|
|
Property & Casualty
| | | | | | | | | | | | |
|
Fixed maturity securities, at fair value (amortized
cost 2018, $840.4; 2017, $743.2)
| | | | | | | |
848.6
| | |
781.1
| | |
8.6
|
%
|
|
Equity securities, at fair value (cost 2017, $59.9)
| | | | | | | |
56.5
| | |
75.7
| | |
-25.4
|
%
|
|
Short-term investments
| | | | | | | |
13.4
| | |
13.3
| | |
0.8
|
%
|
|
Other investments
| | | | | | | |
82.8
|
| |
69.8
|
| |
18.6
|
%
|
|
Total Property & Casualty investments
| | | | | | | |
1,001.3
| | |
939.9
| | |
6.5
|
%
|
| | | | | | | | | | | |
|
|
Corporate investments
| | | | | | | |
11.5
| | |
14.7
| | |
-21.8
|
%
|
| | | | | | | | | | | |
|
|
Total investments
| | | | | | | |
8,242.0
| | |
8,337.1
| | |
-1.1
|
%
|
| | | | | | | | | | | |
|
|
Net investment income
| | | | | | | | | | | | |
|
Before tax
| |
$
|
99.1
| | |
$
|
92.3
| | |
7.4
|
%
| |
$
|
288.1
| | |
$
|
275.0
| | |
4.8
|
%
|
|
After tax
| |
79.0
| | |
61.4
| | |
28.7
|
%
| |
229.7
| | |
182.8
| | |
25.7
|
%
|
View source version on businesswire.com: https://www.businesswire.com/news/home/20181030006088/en/
Horace Mann Educators Corporation
Heather J. Wietzel
Vice
President, Investor Relations
217-788-5144
investorrelations@horacemann.com
Source: Horace Mann Educators Corporation