SPRINGFIELD, Ill.--(BUSINESS WIRE)--Horace Mann Educators Corporation (NYSE: HMN) (the "Company†or "Horace Mann†) today announced the pricing of its offering of $300,000,000 aggregate principal amount of 4.700% Senior Notes due 2030 (the "Notes†). The transaction is expected to close on September 26, 2025, subject to the satisfaction of various customary closing conditions. The Company intends to use the net proceeds from the issuance of the Notes for general corporate purposes, including repa. ...

Group 1 - Horace Mann Educators Corporation is the largest company in the US dedicated to serving educators, founded in 1945 by two teachers [1] - The company operates within a free-market system, where financial markets are considered efficient, reflecting the real current value of most stocks [1] - Investment opportunities may arise from stocks that are less widely followed or those that do not accurately reflect existing market opportunities [1]

Core Viewpoint - Horace Mann (HMN) has received an upgrade to a Zacks Rank 2 (Buy), indicating a positive outlook on its earnings estimates, which is a significant factor influencing stock prices [1][3]. Earnings Estimates and Stock Price Impact - The Zacks rating system reflects changes in earnings estimates, which are strongly correlated with stock price movements, particularly due to institutional investors adjusting their valuations based on these estimates [4][6]. - An increase in earnings estimates typically leads to higher fair value for a stock, prompting institutional investors to buy or sell, thus affecting stock prices [4]. Company Performance and Outlook - The upgrade for Horace Mann suggests an improvement in the company's underlying business, which should encourage investors to drive the stock price higher [5]. - Over the past three months, the Zacks Consensus Estimate for Horace Mann has increased by 6.3%, with expected earnings of $4.14 per share for the fiscal year ending December 2025, indicating no year-over-year change [8]. Zacks Rank System - The Zacks Rank system classifies stocks into five groups based on earnings estimates, with a strong track record of performance, particularly for Zacks Rank 1 stocks, which have generated an average annual return of +25% since 1988 [7]. - The upgrade to Zacks Rank 2 places Horace Mann in the top 20% of Zacks-covered stocks, suggesting it has superior earnings estimate revisions and potential for market-beating returns in the near term [10].

Company Overview - Horace Mann (HMN) is based in Springfield and operates in the Finance sector, with a year-to-date share price change of 12.44% [3] - The company currently pays a dividend of $0.35 per share, resulting in a dividend yield of 3.17%, which is significantly higher than the Insurance - Multi line industry's yield of 1.92% and the S&P 500's yield of 1.53% [3] Dividend Performance - The current annualized dividend of Horace Mann is $1.40, reflecting a 2.9% increase from the previous year [4] - Over the past 5 years, the company has increased its dividend 5 times, achieving an average annual increase of 3.20% [4] - The current payout ratio stands at 31%, indicating that the company paid out 31% of its trailing 12-month earnings per share as dividends [4] Earnings Growth Expectations - For the fiscal year, HMN anticipates solid earnings growth, with the Zacks Consensus Estimate for 2025 projected at $4.14 per share, representing a 30.19% increase from the previous year [5] - The company is viewed as an attractive dividend play and a compelling investment opportunity, currently holding a Zacks Rank of 2 (Buy) [6]

Financial Data and Key Metrics Changes - The company reported second quarter core earnings per share of $1.6, a nearly threefold increase over the prior year [5] - Net premiums and contract charges earned were up 8%, with total revenues increasing by 6% [5][22] - Core return on equity for the quarter was 11.3%, bringing the trailing twelve-month core return on equity to 12.6% [5][22] Business Segment Data and Key Metrics Changes - In the Property and Casualty segment, core earnings were $17 million, a $25 million improvement from the segment loss recorded a year ago [7][23] - The combined ratio for Property and Casualty improved to 97%, a nearly 15-point improvement over the prior year [7][23] - In the Life and Retirement segment, core earnings doubled compared to last year, driven by higher net investment income returns [8][24] - Individual Supplemental and Group Benefits segment contributed $13 million to core earnings, with net written premiums of $66 million, a 3% increase over the prior year [26] Market Data and Key Metrics Changes - The company experienced a 10% increase in auto sales year to date [15] - Individual Supplemental sales reached $6 million in the second quarter, a 43% increase over the prior year [16][27] - The company reported strong policyholder retention rates, with auto retention at nearly 84% and property retention at 89% [24] Company Strategy and Development Direction - The company aims for a 10% average compound annual growth rate in core EPS and a sustained 12% to 13% core return on equity by 2028 [11] - Strategic investments are being made in sales force growth and marketing tools to enhance brand awareness and lead generation [11][12] - The company is focused on building partnerships and providing solutions to educators, enhancing brand loyalty and access to schools [13][19] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in delivering sustained profitable growth and shareholder value creation [19][32] - The company is operating from a position of strength, with a strong competitive advantage and confidence in market-leading growth [19] - Management acknowledged the challenges of predicting catastrophe losses but emphasized a prudent approach based on historical averages [21][39] Other Important Information - The company has authorized an additional $50 million for share repurchase, with $13 million returned to shareholders year to date [17][31] - The company continues to see strong results from its core fixed income portfolio, with new money yields exceeding book yield for the fourteenth consecutive quarter [30] Q&A Session Summary Question: Insights on the P&C segment and catastrophe load guidance - Management discussed the favorable underlying results and the approach to catastrophe guidance based on historical averages, emphasizing the unpredictability of weather events [34][38][42] Question: Growth expectations in auto and home insurance - Management indicated that while there is increased competition, they expect retention to stabilize and new business sales momentum to continue, leading to growth in policy counts [45][46][50] Question: Volumes in individual supplemental and Group Benefits - Management highlighted strong sales growth in individual supplemental driven by increased productivity and a favorable outlook for Group Benefits, particularly in the upcoming quarters [58][64][66] Question: Outlook for PIF growth and educator customer base - Management confirmed that the majority of their business remains focused on educators, with ongoing efforts to explore new channels while maintaining a strong educator-centric approach [69][70]

Financial Performance - Horace Mann's second-quarter core earnings per share (EPS) was $1.06[6] - The company's core return on equity (ROE) reached 12.6%, a 6.1 percentage point increase compared to the previous year[6, 7] - Horace Mann repurchased $13 million of shares year-to-date at an average multiple of 1.05x book value[7] - The company's adjusted book value per share has shown a 7.0% compound annual growth since 2010[8] Segment Results - The Property & Casualty (P&C) combined ratio improved to 97.0%, a 14.5 percentage point improvement year-over-year[6, 7] - Life & Retirement (L&R) core earnings doubled compared to the prior year, reaching $24.6 million[7, 16] - Individual Supplemental sales increased by 43%[7] and Auto sales were up by 6%[7, 15] Investment Portfolio - The investment portfolio has a fair value of $6.9 billion[32] - The company's annualized limited partnership returns were 10%[7] - The company's annualized commercial mortgage loan fund returns were 7%[7] Guidance and Outlook - Horace Mann revised its full-year 2025 core EPS guidance to a range of $4.15 to $4.45[41] - The company anticipates total net investment income of $470 million to $480 million[43]

Company Performance - Horace Mann (HMN) reported quarterly earnings of $1.06 per share, exceeding the Zacks Consensus Estimate of $0.61 per share, and significantly up from $0.20 per share a year ago, representing an earnings surprise of +73.77% [1][2] - The company posted revenues of $411.7 million for the quarter ended June 2025, which missed the Zacks Consensus Estimate by 3.06%, compared to $388.1 million in the same quarter last year [3] Market Comparison - Horace Mann shares have increased by approximately 7.2% since the beginning of the year, slightly outperforming the S&P 500's gain of 7.1% [4] Future Outlook - The current consensus EPS estimate for the upcoming quarter is $1.04 on revenues of $428.7 million, and for the current fiscal year, it is $3.99 on revenues of $1.7 billion [8] - The Zacks Industry Rank for Insurance - Multi line is in the top 39% of over 250 Zacks industries, indicating a favorable outlook compared to the bottom 50% [9]

PART I - FINANCIAL INFORMATION [Item 1. Consolidated Financial Statements](index=3&type=section&id=Item%201.%20Consolidated%20Financial%20Statements) This section presents the unaudited consolidated financial statements, including balance sheets, statements of operations, changes in shareholders' equity, and cash flows, along with detailed explanatory notes [Consolidated Balance Sheets](index=3&type=section&id=Consolidated%20Balance%20Sheets%20as%20of%20June%2030%2C%202025%20(Unaudited)%20and%20December%2031%2C%202024) Total assets increased to **$14,728.3 million** by June 30, 2025, with corresponding increases in liabilities and shareholders' equity, driven by growth in investments and separate account variable annuity assets | Metric | June 30, 2025 ($ millions) | December 31, 2024 ($ millions) | | :----- | :------------------------- | :----------------------------- | | Total Assets | 14,728.3 | 14,487.8 | | Total Liabilities | 13,368.0 | 13,200.3 | | Total Shareholders' Equity | 1,360.3 | 1,287.5 | | Total Investments | 7,040.6 | 6,916.4 | | Separate Account variable annuity assets | 3,863.3 | 3,708.8 | [Consolidated Statements of Operations and Comprehensive Income (Loss)](index=5&type=section&id=Consolidated%20Statements%20of%20Operations%20and%20Comprehensive%20Income%20(Loss)%20for%20the%20Three%20and%20Six%20Months%20Ended%20June%2030%2C%202025%20and%202024%20(Unaudited)) Net income significantly increased for both the three and six months ended June 30, 2025, driven by higher total revenues and a decrease in total benefits, losses, and expenses | Metric | 3 Months Ended June 30, 2025 ($ millions) | 3 Months Ended June 30, 2024 ($ millions) | % Change (3 Months) | 6 Months Ended June 30, 2025 ($ millions) | 6 Months Ended June 30, 2024 ($ millions) | % Change (6 Months) | | :----- | :---------------------------------------- | :---------------------------------------- | :------------------ | :---------------------------------------- | :---------------------------------------- | :------------------ | | Total Revenues | 411.7 | 388.1 | 6.1% | 828.1 | 774.1 | 7.0% | | Net Income | 29.4 | 3.8 | 673.7% | 67.6 | 30.3 | 123.1% | | Basic EPS | 0.71 | 0.09 | 688.9% | 1.64 | 0.74 | 121.6% | | Diluted EPS | 0.71 | 0.09 | 688.9% | 1.63 | 0.73 | 123.3% | | Total Benefits, Losses and Expenses | 375.2 | 383.5 | -2.2% | 744.1 | 736.5 | 1.0% | | Metric | 3 Months Ended June 30, 2025 ($ millions) | 3 Months Ended June 30, 2024 ($ millions) | 6 Months Ended June 30, 2025 ($ millions) | 6 Months Ended June 30, 2024 ($ millions) | | :----- | :---------------------------------------- | :---------------------------------------- | :---------------------------------------- | :---------------------------------------- | | Net Income | 29.4 | 3.8 | 67.6 | 30.3 | | Other Comprehensive Income (Loss), net of tax | 5.3 | 9.6 | 36.4 | 31.3 | | Comprehensive Income | 34.7 | 13.4 | 104.0 | 61.6 | [Consolidated Statements of Changes in Shareholders' Equity](index=6&type=section&id=Consolidated%20Statements%20of%20Changes%20in%20Shareholders'%20Equity%20for%20the%20Three%20and%20Six%20Months%20Ended%20June%2030%2C%202025%20and%202024%20(Unaudited)) Shareholders' equity increased to **$1,360.3 million** by June 30, 2025, primarily due to net income and positive changes in accumulated other comprehensive income, despite increased dividends paid | Metric | 3 Months Ended June 30, 2025 ($ millions) | 3 Months Ended June 30, 2024 ($ millions) | 6 Months Ended June 30, 2025 ($ millions) | 6 Months Ended June 30, 2024 ($ millions) | | :----- | :---------------------------------------- | :---------------------------------------- | :---------------------------------------- | :---------------------------------------- | | Shareholders' Equity at End of Period | 1,360.3 | 1,208.8 | 1,360.3 | 1,208.8 | | Net Income | 29.4 | 3.8 | 67.6 | 30.3 | | Dividends Paid | (14.6) | (14.2) | (29.3) | (28.5) | | Change in Accumulated Other Comprehensive Income (Loss) | (217.1) | (282.7) | (217.1) | (282.7) | [Consolidated Statements of Cash Flows](index=8&type=section&id=Consolidated%20Statements%20of%20Cash%20Flows%20for%20the%20Six%20Months%20Ended%20June%2030%2C%202025%20and%202024%20(Unaudited)) Operating cash flow significantly increased to **$272.1 million** for the six months ended June 30, 2025, while financing activities saw a substantial increase in cash usage | Metric | 6 Months Ended June 30, 2025 ($ millions) | 6 Months Ended June 30, 2024 ($ millions) | % Change | | :----- | :---------------------------------------- | :---------------------------------------- | :------- | | Net Cash Provided by Operating Activities | 272.1 | 114.7 | 137.2% | | Net Cash Used in Investing Activities | (72.0) | (87.2) | -17.4% | | Net Cash Used in Financing Activities | (197.3) | (42.6) | 363.1% | | Net Decrease in Cash | 2.8 | (15.1) | -118.5% | | Cash at End of Period | 40.9 | 14.6 | 180.1% | [Notes to Consolidated Financial Statements](index=9&type=section&id=Notes%20to%20Consolidated%20Financial%20Statements%20(Unaudited)) This section provides detailed notes on accounting policies, investments, fair value, insurance contracts, reinsurance, segment information, AOCI, cash flow, and contingencies [Note 1 - Basis of Presentation and Significant Accounting Policies](index=9&type=section&id=Note%201%20-%20Basis%20of%20Presentation%20and%20Significant%20Accounting%20Policies) Horace Mann, a holding company for insurance subsidiaries, serves K-12 educators across four segments, with financial statements prepared under GAAP and an immaterial out-of-period correction noted - Horace Mann Educators Corporation is a holding company for insurance subsidiaries, primarily serving K-12 teachers, administrators, and public school employees and their families[17](index=17&type=chunk) - The Company operates in four reporting segments: Property & Casualty, Life & Retirement, Supplemental & Group Benefits, and Corporate & Other[18](index=18&type=chunk) - An immaterial out-of-period correction of an error related to private debt securities decreased net investment income by **$10.2 million** pre-tax (**$8.1 million** after-tax) for the quarter ended June 30, 2025, impacting Life & Retirement (**$5.3 million**) and Supplemental & Group Benefits (**$2.8 million**)[21](index=21&type=chunk) - Significant critical accounting estimates include valuation of hard-to-value fixed maturity securities, credit loss impairments, future policy benefit reserves, and property and casualty unpaid claims and claim expense reserves[26](index=26&type=chunk) - New accounting standards, ASU 2023-09 (Income Tax Disclosures) and ASU 2024-04 (Expense Disaggregation Disclosures), will be effective for the Company in future periods but are not expected to impact consolidated financial position, results of operations, or cash flows[27](index=27&type=chunk)[28](index=28&type=chunk)[29](index=29&type=chunk)[30](index=30&type=chunk) [Note 2 - Investments](index=10&type=section&id=Note%202%20-%20Investments) Net investment income increased for the three months ended June 30, 2025, driven by limited partnership returns, while fixed maturity securities showed **$454.5 million** in gross unrealized losses due to interest rate changes | ($ in millions) | 3 Months Ended June 30, 2025 | 3 Months Ended June 30, 2024 | 6 Months Ended June 30, 2025 | 6 Months Ended June 30, 2024 | | :-------------- | :--------------------------- | :--------------------------- | :--------------------------- | :--------------------------- | | Fixed maturity securities | 59.4 | 72.0 | 131.0 | 142.4 | | Equity securities | 1.0 | 1.4 | 2.0 | 2.6 | | Limited partnership interests | 23.2 | 8.2 | 39.5 | 14.4 | | Short-term and other investments | 5.2 | 4.3 | 10.6 | 9.0 | | Investment expenses | (3.1) | (3.2) | (5.9) | (5.8) | | Net investment income - investment portfolio | 85.7 | 82.7 | 177.2 | 162.6 | | Investment income - deposit asset on reinsurance | 25.1 | 25.7 | 49.5 | 51.2 | | Total net investment income | 110.8 | 108.4 | 226.7 | 213.8 | | ($ in millions) | 3 Months Ended June 30, 2025 | 3 Months Ended June 30, 2024 | 6 Months Ended June 30, 2025 | 6 Months Ended June 30, 2024 | | :-------------- | :--------------------------- | :--------------------------- | :--------------------------- | :--------------------------- | | Fixed maturity securities | (4.1) | (2.3) | (3.9) | (3.3) | | Equity securities | (0.7) | (2.1) | (2.0) | 0.5 | | Short-term investments and other | (1.1) | (1.5) | (3.3) | (0.9) | | Net investment gains (losses) | (5.9) | (5.9) | (9.2) | (3.7) | - The Company's fixed maturity securities portfolio had **$454.5 million** in gross unrealized losses as of June 30, 2025, primarily due to interest rate changes, not credit losses. The Company expects to recover the entire amortized cost basis of these securities[36](index=36&type=chunk)[37](index=37&type=chunk) - As of June 30, 2025, **97.1%** of fixed maturity securities with gross unrealized losses for more than 12 months were investment grade[38](index=38&type=chunk) | Estimated Expected Maturity | Amortized Cost, net ($ millions) | Fair Value ($ millions) | Percent of Total Fair Value | | :------------------------ | :------------------------------- | :---------------------- | :-------------------------- | | Due in 1 year or less | 2,251.8 | 2,189.5 | 40.2% | | Due after 1 year through 5 years | 925.6 | 898.5 | 16.5% | | Due after 5 years through 10 years | 925.0 | 893.4 | 16.4% | | Due after 10 years through 20 years | 981.5 | 859.8 | 15.8% | | Due after 20 years | 763.5 | 612.1 | 11.2% | | Total | 5,847.4 | 5,453.3 | 100.0% | | Average option-adjusted duration, in years | 5.7 | | | - Fixed maturity securities with a fair value of **$1,127.7 million** were on deposit with the Federal Home Loan Bank of Chicago (FHLB) as collateral for funding agreements, advances, and borrowings as of June 30, 2025[47](index=47&type=chunk) [Note 3 - Fair Value of Financial Instruments](index=16&type=section&id=Note%203%20-%20Fair%20Value%20of%20Financial%20Instruments) Level 3 invested assets constituted **9.1%** of the total investment portfolio at fair value, with total financial assets measured at fair value reaching **$5,716.8 million** as of June 30, 2025 - As of June 30, 2025, Level 3 invested assets comprised **9.1%** of the Company's total investment portfolio at fair value[51](index=51&type=chunk) | Financial Assets | Carrying Amount ($ millions) | Fair Value ($ millions) | Level 1 ($ millions) | Level 2 ($ millions) | Level 3 ($ millions) | | :--------------- | :--------------------------- | :---------------------- | :------------------- | :------------------- | :------------------- | | Total fixed maturity securities | 5,453.3 | 5,453.3 | 29.8 | 4,942.4 | 481.1 | | Equity securities | 58.3 | 58.3 | 1.3 | 52.7 | 4.3 | | Limited partnership interests | 33.7 | 33.7 | — | — | 33.7 | | Short-term investments | 155.6 | 155.6 | 155.6 | — | — | | Other investments | 15.9 | 15.9 | — | 15.9 | — | | Totals (Financial Assets) | 5,716.8 | 5,716.8 | 186.7 | 5,011.0 | 519.1 | | Separate Account variable annuity assets | 3,863.3 | 3,863.3 | 3,863.3 | — | — | | Financial Liabilities | 78.1 | 78.1 | — | 4.1 | 74.0 | - For the six months ended June 30, 2025, the Company had net gains of **$4.9 million** with respect to Level 3 financial assets and net losses of **$5.6 million** attributable to changes in the fair value of Level 3 financial liabilities[54](index=54&type=chunk)[55](index=55&type=chunk) | Financial Instruments Not Carried at Fair Value | Carrying Amount ($ millions) | Fair Value ($ millions) | Level 1 ($ millions) | Level 2 ($ millions) | Level 3 ($ millions) | | :-------------------------------------------- | :--------------------------- | :---------------------- | :------------------- | :------------------- | :------------------- | | Other investments | 219.7 | 222.9 | — | 37.5 | 185.4 | | Deposit asset on reinsurance | 2,412.6 | 2,145.2 | — | — | 2,145.2 | | Policyholders' account balances | 5,090.9 | 4,726.0 | — | — | 4,726.0 | | Other policyholder funds | 1,005.8 | 1,005.8 | — | 1,002.9 | 2.9 | | Long-term debt | 547.5 | 577.1 | — | 577.1 | — | [Note 4 - Short-Duration Insurance Contracts](index=23&type=section&id=Note%204%20-%20Short-Duration%20Insurance%20Contracts) Property & Casualty and Group Benefits segments reported net favorable prior years' reserve development for the six months ended June 30, 2025, with total unpaid claims increasing to **$576.6 million** | ($ in millions) | 3 Months Ended June 30, 2025 | 3 Months Ended June 30, 2024 | 6 Months Ended June 30, 2025 | 6 Months Ended June 30, 2024 | | :-------------- | :--------------------------- | :--------------------------- | :--------------------------- | :--------------------------- | | Net reserves, beginning of period | 318.4 | 314.6 | 319.8 | 312.8 | | Total claims and claim expenses incurred | 136.4 | 152.8 | 254.9 | 277.5 | | Total claims and claim expense payments | 133.7 | 136.2 | 253.6 | 259.1 | | Net reserves, end of period | 321.0 | 331.2 | 321.0 | 331.2 | - The Company recognized **$5.5 million** and **$10.8 million** of net favorable prior years' reserve development for Property & Casualty for the three and six months ended June 30, 2025, respectively, due to favorable loss trends in auto and property for accident years 2024 and prior[65](index=65&type=chunk) | ($ in millions) | 3 Months Ended June 30, 2025 | 3 Months Ended June 30, 2024 | 6 Months Ended June 30, 2025 | 6 Months Ended June 30, 2024 | | :-------------- | :--------------------------- | :--------------------------- | :--------------------------- | :--------------------------- | | Net reserves, beginning of period | 83.1 | 86.7 | 79.7 | 88.9 | | Total claims and claim expenses incurred | 15.6 | 16.1 | 34.4 | 30.2 | | Total claims and claim expense payments | 11.3 | 14.7 | 26.7 | 31.0 | | Net reserves, end of period | 87.4 | 88.1 | 87.4 | 88.1 | - Net favorable prior years' reserve development for Group Benefits was **$2.6 million** for the six months ended June 30, 2025, primarily from favorable loss trends in group life and disability for loss years 2024 and prior[68](index=68&type=chunk) | ($ in millions) | As of June 30, 2025 | As of December 31, 2024 | | :-------------- | :------------------ | :---------------------- | | Property & Casualty | 419.8 | 420.6 | | Group Benefits | 113.2 | 104.9 | | Other than short-duration | 43.6 | 43.7 | | Total unpaid claims and claims expenses | 576.6 | 569.2 | [Note 5 - Long-Duration Insurance Contracts](index=24&type=section&id=Note%205%20-%20Long-Duration%20Insurance%20Contracts) Net liability for future policy benefits slightly increased to **$1,624.4 million**, while policyholders' account balances decreased and Separate Account variable annuity liabilities rose as of June 30, 2025 | ($ in millions) | June 30, 2025 | December 31, 2024 | | :-------------- | :------------ | :---------------- | | Whole life | 279.5 | 275.2 | | Term life | 141.0 | 131.8 | | Experience life | 743.1 | 746.6 | | Limited-pay whole life | 54.6 | 52.1 | | Supplemental health | 198.5 | 203.5 | | SPIA (life contingent) | 97.1 | 97.3 | | Limited-pay whole life DPL | 5.5 | 5.2 | | SPIA (life contingent) DPL | 1.5 | 1.5 | | Reconciling items | 103.7 | 109.6 | | Total LFPB | 1,624.4 | 1,622.8 | | ($ in millions) | 3 Months Ended June 30, 2025 | 3 Months Ended June 30, 2024 | 6 Months Ended June 30, 2025 | 6 Months Ended June 30, 2024 | | :-------------- | :--------------------------- | :--------------------------- | :--------------------------- | :--------------------------- | | Whole life | 7.4 | 6.9 | 14.4 | 13.8 | | Term life | 11.1 | 11.0 | 22.8 | 22.2 | | Experience life | 7.3 | 7.7 | 14.7 | 15.4 | | Limited-pay whole life | 1.6 | 1.6 | 3.4 | 3.4 | | Supplemental health | 31.2 | 30.0 | 62.1 | 60.4 | | SPIA (life contingent) | 0.7 | 0.5 | 1.3 | 1.7 | | Total | 59.3 | 57.7 | 118.7 | 116.9 | | ($ in millions) | June 30, 2025 | December 31, 2024 | | :-------------- | :------------ | :---------------- | | Indexed universal life | 82.3 | 72.9 | | Experience Life | 56.5 | 58.0 | | Fixed account annuities | 4,495.1 | 4,508.4 | | Fixed indexed account annuities | 388.6 | 409.5 | | SPIA (non-life contingent) | 27.9 | 28.6 | | Reconciling items | 26.0 | 22.9 | | Total | 5,076.4 | 5,100.3 | | ($ in millions) | June 30, 2025 | December 31, 2024 | | :-------------- | :------------ | :---------------- | | Balance, end of period | 3,863.3 | 3,708.8 | | ($ in millions) | June 30, 2025 | December 31, 2024 | | :-------------- | :------------ | :---------------- | | Whole life | 24.6 | 23.8 | | Term life | 34.8 | 34.2 | | Experience life | 5.4 | 5.5 | | Limited pay whole life | 8.1 | 8.0 | | Indexed universal life | 20.3 | 19.2 | | Supplemental health | 12.1 | 10.6 | | Total annuities | 209.4 | 211.4 | | Reconciling item | 36.7 | 34.5 | | Total | 351.4 | 347.2 | - The Company reviewed significant assumptions for mortality and lapses in Q2 2025 and Q2 2024 and found actual experience materially consistent with underlying assumptions, thus no changes to future assumptions were made[89](index=89&type=chunk) [Note 6 - Reinsurance](index=41&type=section&id=Note%206%20-%20Reinsurance) The Company recognizes reinsurance costs over contract periods and estimates recoverable amounts from reinsurers consistent with insurance liabilities. For the six months ended June 30, 2025, net premiums written and contract deposits were **$812.0 million**, net premiums and contract charges earned were **$600.9 million**, and benefits, claims, and settlement expenses were **$366.7 million**, reflecting the impact of reinsurance activities | ($ in millions) | Direct Amount | Ceded to Other Companies | Assumed from Other Companies | Net Amount | | :-------------- | :------------ | :----------------------- | :--------------------------- | :--------- | | Net premiums written and contract deposits | 830.3 | 30.5 | 12.2 | 812.0 | | Net premiums and contract charges earned | 618.6 | 29.7 | 12.0 | 600.9 | | Benefits, claims and settlement expenses | 381.7 | 22.0 | 7.0 | 366.7 | [Note 7 - Segment Information](index=42&type=section&id=Note%207%20-%20Segment%20Information) The Company manages its business through four segments, with Property & Casualty, Life & Retirement, and Supplemental & Group Benefits reporting positive core earnings for the six months ended June 30, 2025 - The Company's Chief Operating Officer (CODM) reviews financial performance and allocates resources based on core earnings, which excludes after-tax impacts of net investment gains/losses, discontinued operations, impairments, and non-recurring items[93](index=93&type=chunk) | ($ in millions) | Property & Casualty | Life & Retirement | Supplemental & Group Benefits | Corporate & Other | Totals | | :-------------- | :------------------ | :---------------- | :---------------------------- | :---------------- | :----- | | Net premiums and contract charges earned | 197.3 | 39.6 | 65.7 | — | 302.6 | | Net investment income | 14.9 | 97.2 | 10.6 | (1.6) | 121.1 | | Total segment revenues | 212.9 | 141.7 | 74.4 | (1.1) | 427.9 | | Total segment expenses | 191.6 | 111.5 | 57.3 | 12.4 | 372.8 | | Pretax profit (loss) | 21.3 | 30.2 | 17.1 | (13.5) | 55.1 | | Segment profit (loss) (Core earnings) | 16.5 | 24.6 | 13.4 | (10.3) | 44.2 | | Net income | 16.5 | 20.0 | 7.9 | (15.0) | 29.4 | | ($ in millions) | Property & Casualty | Life & Retirement | Supplemental & Group Benefits | Corporate & Other | Totals | | :-------------- | :------------------ | :---------------- | :---------------------------- | :---------------- | :----- | | Net premiums and contract charges earned | 390.0 | 78.1 | 132.8 | — | 600.9 | | Net investment income | 26.6 | 186.2 | 20.0 | 4.1 | 236.9 | | Total segment revenues | 418.6 | 274.0 | 149.8 | 5.1 | 847.5 | | Total segment expenses | 363.9 | 234.1 | 114.8 | 23.8 | 736.6 | | Pretax profit (loss) | 54.7 | 39.9 | 35.0 | (18.7) | 110.9 | | Segment profit (loss) (Core earnings) | 43.3 | 32.5 | 27.4 | (14.3) | 89.0 | | Net income | 43.3 | 26.8 | 19.1 | (21.6) | 67.6 | | ($ in millions) | June 30, 2025 | December 31, 2024 | | :-------------- | :------------ | :---------------- | | Property & Casualty | 1,335.2 | 1,272.3 | | Life & Retirement | 11,865.7 | 11,670.7 | | Supplemental & Group Benefits | 1,370.2 | 1,377.6 | | Corporate & Other | 193.5 | 191.0 | | Intersegment eliminations | (36.3) | (23.8) | | Total | 14,728.3 | 14,487.8 | [Note 8 - Accumulated Other Comprehensive Income (Loss)](index=49&type=section&id=Note%208%20-%20Accumulated%20Other%20Comprehensive%20Income%20(Loss)) AOCI improved to **$(217.1) million** as of June 30, 2025, primarily due to a positive change in net unrealized investment gains on fixed maturity securities | ($ in millions) | Net Unrealized Investment Gains (Losses) on Fixed Maturity Securities | Net Reserve Remeasurements Attributable to Discount Rates | Net Funded Status of Benefit Plans | Total | | :-------------- | :------------------------------------------------------------------ | :-------------------------------------------------------- | :--------------------------------- | :---- | | Beginning balance, January 1, 2025 | (357.4) | 110.9 | (7.0) | (253.5) | | Net current period other comprehensive income (loss) | 47.5 | (11.1) | — | 36.4 | | Ending balance, June 30, 2025 | (309.9) | 99.8 | (7.0) | (217.1) | [Note 9 - Supplemental Consolidated Cash and Cash Flow Information](index=50&type=section&id=Note%209%20-%20Supplemental%20Consolidated%20Cash%20and%20Cash%20Flow%20Information) Total cash and restricted cash increased to **$40.9 million** as of June 30, 2025, with cash paid for interest at **$16.9 million** and income taxes at **$21.5 million** for the six months | ($ in millions) | June 30, 2025 | December 31, 2024 | | :-------------- | :------------ | :---------------- | | Cash | 38.7 | 33.1 | | Restricted cash | 2.2 | 5.0 | | Total cash and restricted cash | 40.9 | 38.1 | | ($ in millions) | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :-------------- | :----------------------------- | :----------------------------- | | Interest | 16.9 | 16.8 | | Income taxes | 21.5 | 13.3 | [Note 10 - Contingencies and Commitments](index=50&type=section&id=Note%2010%20-%20Contingencies%20and%20Commitments) The Company faces legal proceedings related to legacy commercial lines policies, recording **$15.7 million** in Q4 2024 for these liabilities, and has **$423.0 million** in unfunded investment commitments - Horace Mann Insurance Company (HMIC) is defending against litigation and investigating claims related to legacy, long-tail commercial lines policies (asbestos, environmental, sexual molestation) from the late 1960s and early 1970s, following the liquidation of R&Q Reinsurance Company[106](index=106&type=chunk)[107](index=107&type=chunk) - In Q4 2024, the Company recorded **$15.7 million** (after-tax) in costs related to these non-core legacy commercial liability policies[108](index=108&type=chunk) - Unfunded commitments to fund investments, primarily in limited partnership interests, were **$423.0 million** as of June 30, 2025, down from $449.9 million at December 31, 2024[109](index=109&type=chunk) [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations (MD&A)](index=51&type=section&id=Item%202.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) This MD&A analyzes the Company's financial condition, operational results, corporate strategy, and future outlook, including critical accounting estimates and liquidity [Introduction](index=51&type=section&id=Introduction) This introduction provides context for the MD&A, clarifying non-GAAP measures and forward-looking statements, and directs readers to other financial reports for additional information [Corporate Strategy](index=51&type=section&id=Corporate%20Strategy) Horace Mann aims to be the preferred provider of insurance and financial solutions for educators, operating through four distinct reporting segments - Horace Mann's vision is to be the company of choice for insurance and financial solutions for educators and those who serve their communities, providing tailored solutions for lifelong financial success[116](index=116&type=chunk)[117](index=117&type=chunk) - The Company manages its business through four reporting segments: Property & Casualty, Life & Retirement, Supplemental & Group Benefits, and Corporate & Other[118](index=118&type=chunk) [Consolidated Financial Highlights](index=52&type=section&id=Consolidated%20Financial%20Highlights) Total revenues increased by **6.1%** for the three months ended June 30, 2025, with net income surging by **673.7%**, driven by improved Property & Casualty results and lower catastrophe losses | Metric | 3 Months Ended June 30, 2025 ($ millions) | 3 Months Ended June 30, 2024 ($ millions) | % Change (3 Months) | 6 Months Ended June 30, 2025 ($ millions) | 6 Months Ended June 30, 2024 ($ millions) | % Change (6 Months) | | :----- | :---------------------------------------- | :---------------------------------------- | :------------------ | :---------------------------------------- | :---------------------------------------- | :------------------ | | Total revenues | 411.7 | 388.1 | 6.1% | 828.1 | 774.1 | 7.0% | | Net income | 29.4 | 3.8 | 673.7% | 67.6 | 30.3 | 123.1% | | Net Investment gains (losses), after tax | (4.7) | (4.6) | -2.2% | (7.3) | (2.9) | 151.7% | | Per diluted share: Net income | 0.71 | 0.09 | 688.9% | 1.63 | 0.73 | 123.3% | | Book value per share (as of June 30, 2025 / Dec 31, 2024) | | | | 33.31 | 29.60 | 12.5% | | Net income return on equity - annualized | 8.7% | 1.3% | 7.4 pts | 10.2% | 5.1% | 5.1 pts | - Net income increased primarily due to improved Property & Casualty segment results, reflecting the effect of rate and non-rate underwriting actions, and lower catastrophe losses[119](index=119&type=chunk) [Consolidated Results of Operations](index=53&type=section&id=Consolidated%20Results%20of%20Operations) Total revenues increased by **6.1%** for the three months and **7.0%** for the six months ended June 30, 2025, with net income growing substantially due to lower expenses and improved investment performance | ($ in millions) | 3 Months Ended June 30, 2025 | 3 Months Ended June 30, 2024 | % Change (3 Months) | 6 Months Ended June 30, 2025 | 6 Months Ended June 30, 2024 | % Change (6 Months) | | :-------------- | :--------------------------- | :--------------------------- | :------------------ | :--------------------------- | :--------------------------- | :------------------ | | Net premiums and contract charges earned | 302.6 | 280.9 | 7.7% | 600.9 | 556.1 | 8.1% | | Net investment income | 110.8 | 108.4 | 2.2% | 226.7 | 213.8 | 6.0% | | Net investment gains (losses) | (5.9) | (5.9) | —% | (9.2) | (3.7) | N.M. | | Total revenues | 411.7 | 388.1 | 6.1% | 828.1 | 774.1 | 7.0% | | Benefits, claims and settlement expenses | 183.5 | 207.3 | -11.5% | 366.7 | 383.6 | -4.4% | | Operating expenses | 96.9 | 83.0 | 16.7% | 187.7 | 167.5 | 12.1% | | Net income | 29.4 | 3.8 | 673.7% | 67.6 | 30.3 | 123.1% | - Net premiums and contract charges earned increased by **7.7%** for the three months and **8.1%** for the six months ended June 30, 2025, primarily due to rate and inflation adjustments in the Property & Casualty segment[122](index=122&type=chunk) - Total net investment income increased by **$2.4 million** for the three months and **$12.9 million** for the six months ended June 30, 2025, driven by strong returns from the fixed income portfolio and higher returns from commercial mortgage loan and limited partnership funds[123](index=123&type=chunk) - Benefits, claims and settlement expenses decreased by **$23.8 million** for the three months and **$16.9 million** for the six months ended June 30, 2025, due to lower catastrophe losses and underlying losses in the Property & Casualty segment, as well as lower life mortality[128](index=128&type=chunk) - Operating expenses increased by **16.7%** for the three months and **12.1%** for the six months, reflecting inflation, investments in growth initiatives and infrastructure, and increased compensation accruals[130](index=130&type=chunk) - The effective income tax rate was **19.5%** for the six months ended June 30, 2025, with tax-advantaged securities decreasing the rate by **2.4 percentage points**[134](index=134&type=chunk) [Outlook for 2025](index=55&type=section&id=Outlook%20for%202025) The Company projects 2025 full-year core earnings between **$4.15 and $4.45** per diluted share, targeting a core return on equity of **10%+**, with specific segment profitability and catastrophe loss estimates - Estimated 2025 full-year core earnings* are projected to be **$4.15 to $4.45 per diluted share**, aiming for a core return on equity* of **10%+**[139](index=139&type=chunk) - Property & Casualty segment targets include an Auto Combined Ratio in the **mid-90s** and Property at **90 or below**, with approximately **$90 million** in catastrophe losses[140](index=140&type=chunk) - Life & Retirement segment targets a long-term net interest spread between **220 and 230 bps** and mortality in line with actuarial assumptions[140](index=140&type=chunk) - Supplemental & Group Benefits segment targets a blended benefit ratio of **39%**[140](index=140&type=chunk) - Net investment income is projected to be between **$470 million and $480 million** pre-tax[140](index=140&type=chunk) [Application of Critical Accounting Estimates](index=56&type=section&id=Application%20of%20Critical%20Accounting%20Estimates) Significant estimates for financial statements include valuation of fixed maturity securities, credit loss impairments, future policy benefit reserves, and property and casualty unpaid claims - Critical accounting estimates include valuation of hard-to-value fixed maturity securities, evaluation of credit loss impairments for fixed maturity securities, valuation of future policy benefit reserves, and valuation of liabilities for property and casualty unpaid claims and claim expense reserves[143](index=143&type=chunk) - As of June 30, 2025, there were no material changes to accounting policies for areas most subject to significant management judgments compared to December 31, 2024[142](index=142&type=chunk) [Results of Operations by Segment](index=57&type=section&id=Results%20of%20Operations%20by%20Segment) This section details the financial performance of the Company's four reporting segments, analyzing key revenue, expense, and profitability drivers for the current and prior periods [Property & Casualty](index=57&type=section&id=Property%20%26%20Casualty) The Property & Casualty segment reported improved net income for the three and six months ended June 30, 2025, driven by increased premiums, lower underlying loss ratios, and reduced catastrophe losses - Property & Casualty segment net income for the three and six months ended June 30, 2025, was **$16.5 million** and **$43.3 million**, respectively, reflecting positive effects of rate and non-rate actions and lower catastrophe losses[151](index=151&type=chunk) - Net premiums written increased by **6.1%** for the quarter, with average written premiums rising for both property and auto. Sales were up **5.5%** from the prior year[152](index=152&type=chunk) - Catastrophe losses for the quarter were **$29.7 million** (pretax), contributing **15.0 points** to the combined ratio, down from $40.9 million (**22.8 points**) in Q2 2024, due to lower frequency and severity of claims[153](index=153&type=chunk) - The second-quarter auto underlying loss ratio improved by **5.5 points** to **68.7%**, benefiting from higher average earned premium. Average written premiums for auto policies increased by **8.8%**[154](index=154&type=chunk) - The second-quarter property underlying loss ratio decreased by **14.1 points** to **36.8%**, reflecting increased average earned premium and lower frequency and severity. Average written premiums for property policies increased by **11.6%**[155](index=155&type=chunk) | Metric | 3 Months Ended June 30, 2025 ($ millions) | 3 Months Ended June 30, 2024 ($ millions) | % Change (3 Months) | 6 Months Ended June 30, 2025 ($ millions) | 6 Months Ended June 30, 2024 ($ millions) | % Change (6 Months) | | :----- | :---------------------------------------- | :---------------------------------------- | :------------------ | :---------------------------------------- | :---------------------------------------- | :------------------ | | Net premiums written* | 211.4 | 199.2 | 6.1% | 396.7 | 371.3 | 6.8% | | Net premiums earned | 197.3 | 179.2 | 10.1% | 390.0 | 352.4 | 10.7% | | Total losses and loss adjustment expenses | 136.5 | 152.8 | -10.7% | 254.8 | 277.5 | -8.2% | | Underwriting gain (loss) | 5.7 | (20.6) | 127.7% | 26.1 | (20.5) | N.M. | | Net income (loss) | 16.5 | (8.6) | 291.9% | 43.3 | 2.0 | 2,065.0% | | Auto Combined ratio | 98.5% | 97.2% | 1.3 pts | 96.8% | 99.0% | -2.2 pts | | Property Combined ratio | 94.6% | 136.3% | -41.7 pts | 87.3% | 117.5% | -30.2 pts | [Life & Retirement](index=60&type=section&id=Life%20%26%20Retirement) The Life & Retirement segment's net income increased by **62.6%** for the three months ended June 30, 2025, primarily due to lower life mortality costs and higher net investment income - Life & Retirement segment net income increased by **62.6%** for the three months and **11.7%** for the six months ended June 30, 2025, primarily due to favorable benefits from lower life mortality costs and higher net investment income[163](index=163&type=chunk) - Net annuity contract deposits increased by **7.8%** for the quarter to **$110.2 million**[164](index=164&type=chunk) - The Company manages interest rate risk by coordinating asset and liability cash flows and durations. A **100 basis point** decline in the average reinvestment rate is estimated to reduce net investment income by **$2.4 million** in year one and **$4.7 million** in year two[166](index=166&type=chunk)[167](index=167&type=chunk)[168](index=168&type=chunk) | Metric | 3 Months Ended June 30, 2025 ($ millions) | 3 Months Ended June 30, 2024 ($ millions) | % Change (3 Months) | 6 Months Ended June 30, 2025 ($ millions) | 6 Months Ended June 30, 2024 ($ millions) | % Change (6 Months) | | :----- | :---------------------------------------- | :---------------------------------------- | :------------------ | :---------------------------------------- | :---------------------------------------- | :------------------ | | Net premiums written and contract deposits* | 141.7 | 133.6 | 6.1% | 282.0 | 265.2 | 6.3% | | Total revenues | 134.9 | 131.5 | 2.6% | 267.3 | 259.9 | 2.8% | | Benefits and change in reserves | 24.2 | 31.0 | -21.9% | 62.2 | 60.9 | 2.1% | | Net income | 20.0 | 12.3 | 62.6% | 26.8 | 24.0 | 11.7% | | Core earnings* | 24.6 | 12.3 | 100.0% | 32.5 | 22.2 | 46.4% | | Life insurance in force ($ billions) | | | | 21.2 | 20.8 | 2.2% | | Annuity contracts in force (thousands) | | | | 215 | 220 | -2.3% | [Supplemental & Group Benefits](index=63&type=section&id=Supplemental%20%26%20Group%20Benefits) The Supplemental & Group Benefits segment's net income decreased for the three and six months ended June 30, 2025, due to lower net investment income and higher operating expenses, despite increased individual product sales - Supplemental & Group Benefits segment net income decreased for the three and six months ended June 30, 2025, due to lower net investment income and higher operating expenses from growth investments[173](index=173&type=chunk) - Individual supplemental product sales increased by **42.5%** for the quarter, contributing to a total sales increase of **$0.4 million** for the three months ended June 30, 2025[175](index=175&type=chunk) | Metric | 3 Months Ended June 30, 2025 ($ millions) | 3 Months Ended June 30, 2024 ($ millions) | % Change (3 Months) | 6 Months Ended June 30, 2025 ($ millions) | 6 Months Ended June 30, 2024 ($ millions) | % Change (6 Months) | | :----- | :---------------------------------------- | :---------------------------------------- | :------------------ | :---------------------------------------- | :---------------------------------------- | :------------------ | | Net premiums and contract charges earned | 65.7 | 63.7 | 3.1% | 132.8 | 127.9 | 3.8% | | Net investment income | 7.1 | 10.5 | -32.4% | 16.5 | 18.3 | -9.8% | | Total revenues | 70.9 | 73.0 | -2.9% | 146.3 | 142.0 | 3.0% | | Benefits, settlement expenses and change in reserves | 24.0 | 24.7 | -2.8% | 52.1 | 47.5 | 9.7% | | Net income | 7.9 | 14.1 | -44.0% | 19.1 | 25.1 | -23.9% | | Core earnings* | 13.4 | 17.0 | -21.2% | 27.4 | 30.8 | -11.0% | | Benefits ratio | 36.7% | 38.8% | -2.1 pts | 39.3% | 37.2% | 2.1 pts | | Operating expense ratio | 46.7% | 36.6% | 10.1 pts | 42.8% | 39.0% | 3.8 pts | [Corporate & Other](index=65&type=section&id=Corporate%20%26%20Other) The Corporate & Other segment reported net losses for both the three and six months ended June 30, 2025, primarily due to lower net investment income and higher operating expenses - The Corporate & Other segment's net loss for the three and six months ended June 30, 2025, was **$15.0 million** and **$21.6 million**, respectively, primarily due to lower net investment income and higher net investment losses and operating expenses[177](index=177&type=chunk) | Metric | 3 Months Ended June 30, 2025 ($ millions) | 3 Months Ended June 30, 2024 ($ millions) | % Change (3 Months) | 6 Months Ended June 30, 2025 ($ millions) | 6 Months Ended June 30, 2024 ($ millions) | % Change (6 Months) | | :----- | :---------------------------------------- | :---------------------------------------- | :------------------ | :---------------------------------------- | :---------------------------------------- | :------------------ | | Total revenues | (1.1) | 0.2 | -650.0% | 5.1 | 0.4 | N.M. | | Total expenses | 12.4 | 12.1 | 2.5% | 23.8 | 23.0 | 3.5% | | Loss before income taxes | (13.5) | (11.9) | -13.4% | (18.7) | (22.6) | 17.3% | | Core loss* after tax | (10.3) | (9.4) | -9.6% | (14.3) | (17.9) | 20.1% | | Net investment gains (losses), after tax | (4.7) | (4.6) | -2.2% | (7.3) | (2.9) | N.M. | | Net loss | (15.0) | (14.0) | -7.1% | (21.6) | (20.8) | -3.8% | [Investment Results](index=65&type=section&id=Investment%20Results) Net investment income from the managed portfolio increased for the three and six months ended June 30, 2025, while pretax net unrealized investment losses on fixed maturity securities decreased to **$394.1 million** - Net investment income from the managed investment portfolio increased by **$3.0 million** for the three months and **$14.6 million** for the six months ended June 30, 2025, primarily due to higher returns in limited partnerships[179](index=179&type=chunk) - Pretax net unrealized investment losses on fixed maturity securities decreased by **$77.0 million (30.6%)** to **$394.1 million** as of June 30, 2025, compared to December 31, 2024, mainly due to a decrease in US Treasury rates[181](index=181&type=chunk)[188](index=188&type=chunk) - As of June 30, 2025, the diversified fixed maturity securities portfolio totaled approximately **$5.5 billion** in fair value, with **97.2%** being investment grade and an average quality rating of **AA-**[184](index=184&type=chunk) | ($ in millions) | 3 Months Ended June 30, 2025 | 3 Months Ended June 30, 2024 | % Change (3 Months) | 6 Months Ended June 30, 2025 | 6 Months Ended June 30, 2024 | % Change (6 Months) | | :-------------- | :--------------------------- | :--------------------------- | :------------------ | :--------------------------- | :--------------------------- | :------------------ | | Net investment income - managed investment portfolio | 85.7 | 82.7 | 3.6% | 177.2 | 162.6 | 9.0% | | Investment income - deposit asset on reinsurance | 25.1 | 25.7 | -2.3% | 49.5 | 51.2 | -3.3% | | Total net investment income | 110.8 | 108.4 | 2.2% | 226.7 | 213.8 | 6.0% | | Pretax net investment gains (losses) | (5.9) | (5.9) | —% | (9.2) | (3.7) | 148.6% | | Rating Category | Fair Value ($ millions) | Percent of Portfolio Fair Value | | :-------------- | :---------------------- | :------------------------------ | | AAA | 631.8 | 11.6% | | AA | 2,377.1 | 43.6% | | A | 1,094.4 | 20.1% | | BBB | 1,071.1 | 19.6% | | BB | 80.4 | 1.5% | | B | 32.9 | 0.6% | | CCC or lower | 2.0 | —% | | Not rated | 163.6 | 3.0% | | Total fixed maturity securities | 5,453.3 | 100.0% | | Total equity securities | 58.3 | | | Total combined portfolios | 5,511.6 | | [Liquidity and Capital Resources](index=69&type=section&id=Liquidity%20and%20Capital%20Resources) Net cash provided by operating activities significantly increased to **$272.1 million** for the six months ended June 30, 2025, with total capital at **$1,907.8 million** and a debt-to-total capital ratio of **28.7%** - The Company's liquidity and access to capital were not materially impacted by inflation or changes in interest rates during the three and six months ended June 30, 2025[189](index=189&type=chunk) - Net cash provided by operating activities increased by **$157.4 million** to **$272.1 million** for the six months ended June 30, 2025[194](index=194&type=chunk) - Net cash used in financing activities increased by **$154.7 million** for the six months ended June 30, 2025, primarily due to increased net cash outflow from reverse repurchase agreements, deposit asset on reinsurance, benefits/withdrawals from variable annuities, and FHLB funding agreements[199](index=199&type=chunk) - Total capital was **$1,907.8 million** as of June 30, 2025, including **$547.5 million** of long-term debt. The debt-to-total capital ratio was **28.7%** (**25.9%** excluding net unrealized investment losses and reserve remeasurements), slightly above the long-term target of **25.0%**[208](index=208&type=chunk) - Shareholders' equity was **$1,360.3 million** as of June 30, 2025. Book value per share was **$33.31**, and adjusted book value per share was **$38.46**[209](index=209&type=chunk) - The Company has a **$325.0 million** Revolving Credit Facility available, expiring May 19, 2030, and a universal shelf registration statement filed in March 2024 for capital management flexibility[213](index=213&type=chunk)[216](index=216&type=chunk) | ($ in millions) | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | % Change | | :-------------- | :----------------------------- | :----------------------------- | :------- | | Net cash provided by operating activities | 272.1 | 114.7 | 137.2% | | Net cash used in Investing Activities | (72.0) | (87.2) | -17.4% | | Net cash used in Financing Activities | (197.3) | (42.6) | 363.1% | | Net decrease in cash | 2.8 | (15.1) | -118.5% | | Cash at end of period | 40.9 | 14.6 | 180.1% | | Debt Type | Interest Rates | Final Maturity | June 30, 2025 ($ millions) | December 31, 2024 ($ millions) | | :-------- | :------------- | :------------- | :------------------------- | :----------------------------- | | Revolving Credit Facility | Variable | 2026 | — | — | | 7.25% 2023 Senior Notes | 7.25% | 2028 | 297.6 | 297.3 | | 4.50% 2015 Senior Notes | 4.50% | 2025 | 249.9 | 249.7 | | Total Long-term debt | | | 547.5 | 547.0 | [Item 3. Quantitative and Qualitative Disclosures About Market Risk](index=75&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) The Company's primary market risk exposure is market value risk, influenced by changes in investment yields and interest rates, managed through asset-liability coordination and diversification - The primary market risk exposure is market value risk, which can arise from changes in investment yields, liquidity, issuer financial prospects, or credit rating downgrades[221](index=221&type=chunk) - Significant changes in interest rates expose the Company to the risk of losses or reduced income due to differences between interest rates earned on investments and credited rates on insurance and investment contract liabilities[222](index=222&type=chunk) - The Company manages market value risk by coordinating projected cash inflows of assets with projected cash outflows of liabilities, maintaining reasonable durations, and ensuring investment quality, liquidity, and diversification[223](index=223&type=chunk) [Item 4. Controls and Procedures](index=76&type=section&id=Item%204.%20Controls%20and%20Procedures) Management, including the CEO and CFO, concluded that disclosure controls and procedures were effective as of June 30, 2025, with no material weaknesses or significant changes in internal control - As of June 30, 2025, the CEO and CFO concluded that the Company's disclosure controls and procedures were effective[225](index=225&type=chunk) - No material weaknesses in disclosure controls and procedures were identified, and no significant changes in internal control over financial reporting occurred during the period[225](index=225&type=chunk)[226](index=226&type=chunk) PART II - OTHER INFORMATION [Item 1. Legal Proceedings](index=77&type=section&id=Item%201.%20Legal%20Proceedings) Details regarding noteworthy litigation are referenced in Note 10 of the Consolidated Financial Statements within Part I - Item 1 of this report - Noteworthy litigation details are provided in Note 10 of the Consolidated Financial Statements[229](index=229&type=chunk) [Item 1A. Risk Factors](index=77&type=section&id=Item%201A.%20Risk%20Factors) No material changes to the risk factors previously disclosed in the Company's Annual Report on Form 10-K for the year ended December 31, 2024, have occurred - No material changes to risk factors have occurred since the Annual Report on Form 10-K for the year ended December 31, 2024[230](index=230&type=chunk) [Item 2. Unregistered Sales of Equity Securities and Use of Proceeds](index=77&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) The Board authorized a new **$50 million** share repurchase program on May 13, 2025, following the existing program, under which **175,492 shares** were repurchased during the quarter - The Board authorized a new **$50 million** share repurchase program (2025 Program) on May 13, 2025, to follow the completion of the existing 2022 Program[231](index=231&type=chunk) | Period | Total Number of Shares Purchased | Average Price Paid per Share | Approximate Dollar Value of Shares that may yet be Purchased under the Program ($ millions) | | :----- | :------------------------------- | :--------------------------- | :---------------------------------------------------------------------------------------- | | April 1 - 30 | 175,192 | 40.14 | 19.2 | | May 1 - 31 | 300 | 40.02 | 69.2 | | June 1 - 30 | — | — | 69.2 | | Total | 175,492 | 40.14 | 69.2 | [Item 5. Other Information](index=77&type=section&id=Item%205.%20Other%20Information) No executive officers or directors adopted, modified, or terminated Rule 10b5-1 or non-Rule 10b5-1 trading arrangements during the three months ended June 30, 2025 - No executive officers or directors adopted, modified, or terminated Rule 10b5-1 or non-Rule 10b5-1 trading arrangements during the three months ended June 30, 2025[233](index=233&type=chunk) [Item 6. Exhibits](index=78&type=section&id=Item%206.%20Exhibits) This section lists all exhibits filed with the Quarterly Report on Form 10-Q, including the Fourth Amendment to Credit Agreement and various certifications | Exhibit No. | Description | | :---------- | :---------- | | 10.1 | Fourth Amendment to Credit Agreement dated as of May 19, 2025 | | 31.1 | Certification by Marita Zuraitis, Chief Executive Officer of HMEC | | 31.2 | Certification by Ryan E. Greenier, Chief Financial Officer of HMEC | | 32.1 | Certification by Marita Zuraitis, Chief Executive Officer of HMEC | | 32.2 | Certification by Ryan E. Greenier, Chief Financial Officer of HMEC | | 99.1 | Glossary of Selected Terms | | 101.INS | XBRL Instance Document | | 101.SCH | XBRL Taxonomy Extension Schema | | 101.CAL | XBRL Taxonomy Extension Calculation Linkbase | | 101.DEF | XBRL Taxonomy Extension Definition Linkbase | | 101.LAB | XBRL Taxonomy Extension Label Linkbase | | 101.PRE | XBRL Taxonomy Extension Presentation Linkbase | SIGNATURES [SIGNATURES](index=79&type=section&id=SIGNATURES) This section contains the signatures of the authorized representatives of Horace Mann Educators Corporation, certifying the filing of the report on August 6, 2025 - The report was signed by Marita Zuraitis (President and CEO), Ryan E. Greenier (EVP and CFO), and Maureen Temchuk (VP, Controller and CAO) on August 6, 2025[237](index=237&type=chunk)

Second-Quarter 2025 Financial Results Overview [Key Financial Highlights](index=1&type=section&id=Key%20Financial%20Highlights) Horace Mann reported strong Q2 2025 results, with net income and core earnings significantly up, driven by profitability and lower catastrophe costs - Horace Mann Educators Corporation (NYSE:HMN) reported financial results for the three and six months ended June 30, 2025[2](index=2&type=chunk) - Record second-quarter core earnings reflect very strong business profitability and solid growth momentum, as well as Property & Casualty catastrophe costs that were meaningfully below prior year and recent prior periods[5](index=5&type=chunk) Second-Quarter 2025 Key Financial Highlights | Metric | Q2 2025 | Q2 2024 | % Change | | :----- | :------ | :------ | :------- | | Net income | $29.4 million | $3.8 million | 673.7% | | Core earnings* | $44.2 million | $11.3 million | 291.2% | | Total revenue | $411.7 million | $388.1 million | 6.1% | - Net premiums and contract charges earned were up **8%** for the quarter[6](index=6&type=chunk) - Second-quarter Property & Casualty segment combined ratio of **97.0%** improved **15 points** over prior year[6](index=6&type=chunk) [Detailed Financial Performance](index=1&type=section&id=Detailed%20Financial%20Performance) The company achieved significant year-over-year growth in Q2 and H1 2025 profitability, with core EPS and book values showing substantial improvement Consolidated Financial Results for Three and Six Months Ended June 30, 2025 | Metric | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | % Change | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | % Change | | :-------------------------------- | :------------------------------- | :------------------------------- | :--------- | :------------------------------- | :------------------------------- | :--------- | | Total revenues | $411.7 | $388.1 | 6.1% | $828.1 | $774.1 | 7.0% | | Net income | $29.4 | $3.8 | 673.7% | $67.6 | $30.3 | 123.1% | | Net investment gains (losses), after tax | ($4.7) | ($4.6) | N.M. | ($7.3) | ($2.9) | N.M. | | Non-core earnings, after tax* | ($10.1) | ($2.9) | N.M. | ($14.0) | ($3.9) | N.M. | | Core earnings* | $44.2 | $11.3 | 291.2% | $88.9 | $37.1 | 139.6% | | Net income per diluted share | $0.71 | $0.09 | 688.9% | $1.63 | $0.73 | 123.3% | | Net investment gains (losses) per diluted share, after tax | ($0.11) | ($0.11) | N.M. | ($0.17) | ($0.07) | N.M. | | Non-core earnings per diluted share, after tax* | ($0.24) | ($0.07) | N.M. | ($0.34) | ($0.09) | N.M. | | Core earnings per diluted share* | $1.06 | $0.27 | 292.6% | $2.14 | $0.89 | 140.4% | | Book value per share (as of June 30) | | | | $33.31 | $29.60 | 12.5% | | Adjusted book value per share* (as of June 30) | | | | $38.46 | $36.33 | 5.9% | | Tangible book value per share* (as of June 30) | | | | $33.46 | $31.01 | 7.9% | | Core ROE - LTM* (as of June 30) | | | | 12.6% | 6.5% | 6.1 pts | - Non-core earnings for Q2 2025 included an **($8.1) million** adjustment to net investment income due to an immaterial out-of-period correction related to private debt securities[4](index=4&type=chunk) Management Commentary and Business Outlook [CEO Statement and Strategic Focus](index=1&type=section&id=CEO%20Statement%20and%20Strategic%20Focus) CEO Marita Zuraitis highlighted record core earnings, emphasizing the strategy to deliver consistent shareholder value through business diversification and a solid balance sheet - Record second-quarter core earnings reflect very strong business profitability and solid growth momentum, as well as Property & Casualty catastrophe costs that were meaningfully below prior year and recent prior periods[5](index=5&type=chunk) - The diversification of our business reflects our strategy to deliver consistent and reliable value to shareholders with a solid balance sheet and a compelling dividend[7](index=7&type=chunk) - Horace Mann's ability to empower all educators to achieve lifelong financial success, while also helping employers attract and retain employees by providing more comprehensive benefits[7](index=7&type=chunk) [Full-Year 2025 Guidance](index=1&type=section&id=Full-Year%202025%20Guidance) Horace Mann increased full-year 2025 core EPS guidance after strong H1 results, targeting record core earnings and double-digit shareholder ROE - Full-year 2025 core EPS guidance increased to a range of **$4.15 to $4.45**, taking first-half results into consideration[5](index=5&type=chunk) - The company is on track to meet its 2025 annual goals of record core earnings and a **double-digit shareholder return on equity**[5](index=5&type=chunk)[6](index=6&type=chunk) Additional Information [Quarterly Webcast Details](index=2&type=section&id=Quarterly%20Webcast%20Details) Horace Mann will host a webcast on August 7, 2025, at 11 am ET to discuss Q2 financial results, with replay available later - A conference call will be webcast live at investors.horacemann.com on **August 7, 2025, at 11 am Eastern Time**[8](index=8&type=chunk) - The webcast will be available later in the day for replay[8](index=8&type=chunk) [About Horace Mann](index=2&type=section&id=About%20Horace%20Mann) Horace Mann is the largest multiline financial services company helping America's educators achieve financial success with tailored solutions since 1945 - Horace Mann Educators Corporation (NYSE: HMN) is the largest multiline financial services company focused on helping America's educators and others who serve the community achieve lifelong financial success[9](index=9&type=chunk) - The company offers individual and group insurance and financial solutions tailored to the needs of the educational community[9](index=9&type=chunk) - Founded by Educators for Educators in **1945**, Horace Mann is headquartered in Springfield, Illinois[9](index=9&type=chunk) [Safe Harbor Statement and Non-GAAP Measures](index=2&type=section&id=Safe%20Harbor%20Statement%20and%20Non-GAAP%20Measures) This section discloses forward-looking statements, associated risks, and non-GAAP financial measures, directing readers to SEC filings for details - Certain statements in this news release, including earnings outlook and business strategies, constitute forward-looking statements subject to risks and uncertainties that could cause actual results to differ materially[10](index=10&type=chunk) - Important factors that could cause actual results to differ are found in the 'Risk Factors' and 'Forward-Looking Information' sections of Horace Mann's Annual Reports on Form 10-K and Quarterly Reports on Form 10-Q filed with the SEC[10](index=10&type=chunk) - Information includes measures not based on GAAP; reconciliations to GAAP are in the Appendix to the Investor Supplement, and additional descriptions are in the Glossary of Selected Terms included as an exhibit to SEC filings[11](index=11&type=chunk)

Financial Data and Key Metrics Changes - Gross rental income increased by 11% and net rental income rose by 10% [2][3] - Portfolio valuation grew by 11%, marking the first valuation gain since H1 2017 [3][21] - Earnings per share remained flat at 9.9p, with EPRA earnings reported at £48 million [3][21] - The interim dividend was increased by 5%, reflecting the Board's confidence in future earnings growth [4][29] Business Line Data and Key Metrics Changes - Like-for-like gross rental income increased by 54%, with like-for-like net rental income up 54% as well [4] - Like-for-like leasing volume rose by 13%, with leasing value up by 3% [5][37] - Strong leasing performance in Ireland was noted, with expectations for further growth in the second half [37] Market Data and Key Metrics Changes - The company welcomed 79 million visitors in the first half, an increase of 1 million from the previous year [6] - Group like-for-like sales were up 1%, with Q2 showing a 2% increase [7][11] - Footfall in Birmingham increased by 5% in H1, strengthening to 8% in Q2 [11] Company Strategy and Development Direction - The company is focused on active asset management and repositioning, with a strategy termed "lease up to rent up" [5][36] - Recent acquisitions, including Bullring and Grand Central, are expected to enhance income streams and support growth [8][17] - The company has a clear capital allocation strategy aimed at maximizing opportunities to unlock value [8][40] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in continued strong earnings growth, supported by high demand for retail space [4][19] - The outlook for 2026 and 2027 remains positive, with expected GRI growth of around 15% in 2026 [17][30] - The company is leveraging AI analytics to enhance customer and occupier understanding, which is expected to drive future growth [35] Other Important Information - The company reported a net debt to EBITDA ratio of 7.8 times, with a loan-to-value ratio of 35% [22][28] - The acquisition of Bullring and Grand Central is expected to be immediately 4% earnings accretive [14] - The company has significant potential for future developments, with a GDV potential of around £5.2 billion from various projects [43] Q&A Session Summary Question: What is the impact of the recent acquisitions on earnings? - The acquisition of Bullring and Grand Central is expected to be immediately 4% earnings accretive, with a minimal dilution effect [14] Question: How does the company plan to manage its capital allocation? - The company has a disciplined approach to capital allocation, focusing on high-yielding assets and strategic land monetization [8][40] Question: What are the expectations for future growth in GRI and NRI? - The company has raised its guidance for GRI growth to around 17% for the year, up from a previous estimate of 10% [30]