Core Insights - The Zacks Insurance industry is positioned for growth due to improved pricing, prudent underwriting, and exposure growth [1] - The insurance industry has outperformed the Finance sector and the S&P 500 composite in year-to-date returns [2] Industry Performance - The insurance industry has returned 5.9% year-to-date, surpassing the Finance sector's growth of 4.6% and the S&P 500's appreciation of 0.8% [2] Market Trends - Global commercial insurance rates decreased by 3% in Q1 2025, marking the third consecutive quarterly decline after seven years of increases [3][8] - Despite recent pricing pressures, gross premiums are projected to grow sixfold to exceed $722 billion by 2030 [3][5][8] Catastrophe Losses - Catastrophe losses are driving policy renewal rates, with a reported 3% rise in commercial insurance rates and a 4.9% increase in personal lines in Q1 2025 [5] - Estimated insurance market losses from recent fires in Los Angeles range between $35 billion and $45 billion [4] Technological Investments - Insurers are heavily investing in technology to enhance margins, efficiency, and operational scale, with a projected $4.7 billion in annual global premiums from AI-related insurance by 2032 [11] - The use of advanced technologies like blockchain and AI is expected to significantly reduce costs and improve operational efficiencies [11] Mergers and Acquisitions - A solid capital level supports insurers in pursuing strategic mergers and acquisitions, with the insurance deals market expected to be active in 2025 [10] - Companies engaging in M&A deals valued over $100 million have outperformed the wider market by 1.5 percentage points [10] Growth Stocks - Companies like EverQuote, Horace Mann Educators, Root, and HCI Group are identified as potential growth stocks due to their solid fundamentals and growth prospects [12][14] - EverQuote is leveraging exclusive data assets and technology for long-term growth, with earnings estimates suggesting significant year-over-year growth [15][16] - Horace Mann Educators is expected to benefit from niche focus and improved product offerings, with strong earnings growth projected [17][18] - Root is positioned for growth through its direct-to-consumer model and mobile applications, with substantial revenue and earnings growth estimates [20][21] - HCI Group is engaged in diverse business activities, with strong growth projections for revenues and earnings [22][23]

Core Viewpoint - Horace Mann (HMN) has received an upgrade to a Zacks Rank 1 (Strong Buy) due to an upward trend in earnings estimates, which is a significant factor influencing stock prices [1][2]. Earnings Estimates and Stock Price Movement - The Zacks rating system is based on changes in earnings estimates, which are strongly correlated with near-term stock price movements [3][5]. - Institutional investors utilize earnings estimates to determine the fair value of stocks, leading to buying or selling actions that affect stock prices [3]. Company Performance and Outlook - The upgrade for Horace Mann indicates an improvement in the company's underlying business, which is expected to positively influence its stock price [4]. - Analysts project that Horace Mann will earn $4.01 per share for the fiscal year ending December 2025, reflecting a year-over-year increase of 26.1% [7]. Zacks Rank System - The Zacks Rank system classifies stocks into five groups based on earnings estimates, with Zacks Rank 1 stocks historically generating an average annual return of +25% since 1988 [6]. - Only the top 5% of Zacks-covered stocks receive a 'Strong Buy' rating, indicating superior earnings estimate revisions [8][9].

Summary of Horace Mann Educators (HMN) 2025 Investor Day Company Overview - **Company**: Horace Mann Educators (HMN) - **Industry**: Financial services focused on educators, including insurance and retirement solutions - **Event**: 2025 Investor Day held on May 13, 2025 Key Points and Arguments 1. **Company History and Future Outlook**: Horace Mann has a rich history of 80 years serving educators, which positions the company well for future growth. The company aims to leverage its experience to drive sustainable, profitable growth in the coming years [6][7][8] 2. **Target Market**: The company currently services approximately 1 million out of 8 million public K-12 educators in the U.S., with a broader potential market of around 14 million educators. This indicates significant growth opportunities [17][18] 3. **Growth Strategy**: The growth strategy is centered around three levers: - **Do More of What Works**: Increase penetration in existing markets where the company already has a presence [18] - **Expand Geographically**: Enter new districts and scale operations quickly [18] - **Test and Learn**: Explore new segments and refine approaches based on market feedback [18] 4. **Financial Performance**: The company reported strong earnings in 2024, with a return on equity (ROE) exceeding 10%. The first quarter of 2025 also set records for the company, indicating robust financial health [19][20] 5. **Product Diversification**: The multi-line model of Horace Mann provides earnings diversification, reducing volatility and enhancing overall financial stability. The company offers tailored products for educators, including auto and homeowner's insurance, life insurance, and retirement plans [11][20] 6. **Customer Engagement**: The company emphasizes understanding educators' unique needs, such as student loan debt, and provides solutions that go beyond traditional product offerings. This includes access to state and federal programs for debt reduction [14][15] 7. **Innovative Marketing Strategies**: Horace Mann utilizes integrated omnichannel marketing strategies, allowing educators to engage through various platforms, including local agents, call centers, and digital channels. This flexibility enhances customer experience and satisfaction [63][64] 8. **Payroll Integration**: The company has established over 45,000 payroll integrations with schools, facilitating automatic payments for policies. This system increases retention and participation rates among educators [72][76] 9. **Technological Advancements**: The launch of the in-house CRM system, Catalyst, enhances lead generation and agent efficiency, contributing to overall growth [77][78] 10. **Market Positioning**: Horace Mann positions itself as a leading financial service provider for educators, focusing on delivering value through tailored products and exceptional service [44][92] Additional Important Content - **Economic Resilience**: The company has navigated various economic cycles successfully, indicating a strong foundation and adaptability in changing market conditions [23] - **Regulatory Preparedness**: Horace Mann is well-prepared to work with educators regardless of regulatory changes, leveraging strong state and local relationships [25][26] - **Commitment to Educators**: The company emphasizes its dedication to supporting educators, which is reflected in its product offerings and community engagement initiatives [45][46] This summary encapsulates the key insights and strategic directions discussed during the Horace Mann Educators 2025 Investor Day, highlighting the company's commitment to growth and service excellence in the education sector.

Financial Performance & Goals - Horace Mann achieved a core earnings per share of $3.40 and a core return on equity of 9.4% in 2024 [34] - The company is on track to deliver record full-year core earnings in 2025, with Q1 core earnings per share at $1.07 and a core return on equity of 10.6% [36] - Horace Mann aims for a 10%+ core ROE in 2025 and a 12%-13% core ROE as a 3-year goal [149, 162] - The company anticipates strong free cash flow generation of +75% [149] - Horace Mann projects core earnings per share guidance of $3.85 to $4.15 [149] Market Position & Strategy - Horace Mann is the largest multiline financial services company focused on America's educators [9, 14] - The company has $14.4 billion in assets and $1.6 billion in net premium and contract deposits for 2024 [13] - Horace Mann currently serves almost half of K-12 school locations in the United States [13] - The company estimates it should capture ~2-4% of HHs, with HM's annual share of P&C switchers between 45,000 – 90,000 [62] Growth Initiatives - Horace Mann aims to improve penetration of educator households they currently access, gain access to educator households where they have no local agent footprint, and explore adjacent markets [31, 96] - The company plans to leverage a company-led entry model (B2B2C) to accelerate growth in new territories [64, 122] - Horace Mann intends to double the number of local agents to better meet client needs [103]

Financial Data and Key Metrics Changes - The company reported a core EPS of $1.70 for Q1 2025, a significant increase compared to the prior year, marking a record first quarter [6] - Core earnings reached $45 million or $1.07 per share, reflecting a 73% increase over the prior year [19] - Total net written premiums and contract deposits increased by 7%, with total revenues up by 8% [20] Business Line Data and Key Metrics Changes - The Property and Casualty segment showed strong performance with a combined ratio of 89.4%, improving by 10.5 points over the prior year [7] - In Life and Retirement, earnings were below the prior year primarily due to higher mortality, which was within expected actuarial ranges [8] - Individual Supplemental and Group Benefits segment earnings slightly increased, with net written premiums of $67.6 million, a 5% increase over the prior year [25] Market Data and Key Metrics Changes - Individual supplemental sales surged by 61%, while auto sales increased by 8% and annuity net contract deposits rose by 6% [10] - The company experienced a 40% increase in website visitors, contributing to strong new business sales [11] - The auto rate increase of 14.5% in California went into effect in mid-April, with a property increase of nearly 20% set for July 1 [20] Company Strategy and Development Direction - The company aims to achieve a shareholder return on equity above 10% for 2025, focusing on sustained profitable growth [6][16] - Investments in omnichannel distribution capabilities are expected to drive continued growth and profitability [10] - The company is committed to supporting educators and local communities, as highlighted by their Corporate Social Responsibility efforts [13] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the company's strong financial foundation and ability to navigate macroeconomic uncertainties [15] - The company anticipates continued strong performance in the second quarter, despite historical trends indicating it is typically the highest quarter for catastrophe costs [38] - Management emphasized the importance of their multiline business model in delivering consistent earnings across various economic environments [29] Other Important Information - The company reported a total net investment income of $116 million, a 10% increase over the prior year [9] - The annualized pretax investment yield on the portfolio was 5.09%, with core new money yields at 5.51% [27] - The company has returned $7 million to shareholders through share repurchases year-to-date [14] Q&A Session Summary Question: Could you talk about the run rate earnings power of the Life and the Supplemental Group Benefits segments? - Management indicated that the Life and Retirement business experienced a mortality blip, but overall performance is expected to normalize [33] Question: Could you talk about the cat activity in Q2 2025 year to date and also remind us how we should account for seasonality going into the second quarter? - Management noted that Q1 saw California wildfires with an ultimate loss of $3.7 million, and they expect the second quarter to be their heaviest for catastrophe costs historically [36][38] Question: Were there any new school districts added that drove the growth in individual supplemental distribution? - Management confirmed that there were no new districts added, attributing growth to strong activity from benefit specialists [41] Question: Is there any consideration for increasing reserves for supplemental group benefits products due to macro deterioration? - Management stated that current utilization trends do not indicate a need for increased reserves, and they remain confident in their expectations for group benefits [49][50]

Financial Data and Key Metrics Changes - The company reported a first quarter core EPS of $1.7, a significant increase over the prior year and a record for the first quarter [5] - Core earnings of $45 million or $1.07 per share represented a 73% increase over the prior year, with a core return on equity of 10.6%, reflecting a 4.9% improvement [17] - Total net written premiums and contract deposits increased by 7%, with total revenues up by 8% [18] Business Line Data and Key Metrics Changes - The Property and Casualty segment showed strong performance with a reported combined ratio of 89.4%, a 10.5 point improvement over the prior year [6] - In Life and Retirement, earnings were below the prior year primarily due to higher mortality, which was within expected actuarial ranges [7] - Individual Supplemental and Group Benefits saw earnings slightly above the prior year due to lower policyholder benefits utilization and higher segment net investment income [7][22] Market Data and Key Metrics Changes - Individual supplemental sales increased by 61%, auto sales were up by 8%, and annuity net contract deposits rose by 6% [8] - The company experienced a 40% increase in website visitors, contributing to strong new business sales [9] - The auto rate increase of 14.5% went into effect in mid-April, with a property increase of just under 20% set to take effect on July 1 [18] Company Strategy and Development Direction - The company is focused on driving sustained profitable growth through investments in omnichannel distribution capabilities and enhancing agent productivity [8] - The launch of Catalyst, a proprietary customer relationship management system, is aimed at improving sales force efficiency and customer experience [9] - The company aims to achieve a shareholder return on equity above 10% for the year and is on track to meet its 2025 goals [5][14] Management's Comments on Operating Environment and Future Outlook - Management acknowledged macroeconomic uncertainties but emphasized the company's strong financial foundation and ability to adapt to various economic environments [12][13] - The company is confident in its ability to deliver record core earnings in 2025 and maintain a sustainable double-digit shareholder return on equity [14][28] - Management highlighted the importance of supporting educators and communities as part of their corporate social responsibility efforts [11] Other Important Information - The company reported a total net investment income of $116 million, a 10% increase over the prior year [7] - The annualized pretax investment yield on the portfolio was 5.09%, with core new money yields of 5.51% [25] - The company has returned $7 million to shareholders through share repurchases year-to-date [12][27] Q&A Session Summary Question: Could you talk about the run rate earnings power of the Life and the Supplemental Group Benefits segments? - Management indicated that the Life and Retirement business experienced a slight mortality blip but overall performance is expected to normalize [31][32] Question: Could you talk about the cat activity in Q2 2025 year to date and how to account for seasonality? - Management noted that Q1 saw California wildfires with an ultimate loss of $3.7 million, and they expect the second quarter to be the highest for catastrophe costs historically [34][36] Question: Were there any new school districts added that drove growth in individual supplemental distribution? - Management confirmed that there were no new districts added, attributing growth to strong activity from benefit specialists and a favorable comparison to a light sales quarter in Q1 2024 [40][41] Question: Are there plans to increase reserves for supplemental group benefits products? - Management stated that current utilization trends do not indicate a need for increased reserves, and they remain confident in their expectations for group benefits [46][49]

Company Overview - Horace Mann (HMN) is based in Springfield and operates in the Finance sector, with a year-to-date share price change of 6.07% [3] - The company currently pays a dividend of $0.35 per share, resulting in a dividend yield of 3.36%, which is significantly higher than the Insurance - Multi line industry's yield of 1.68% and the S&P 500's yield of 1.62% [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 five years, the company has raised its dividend five times, achieving an average annual increase of 3.18% [4] - The current payout ratio stands at 43%, indicating that the company distributes 43% of its trailing 12-month earnings per share as dividends [4] Earnings Growth - The Zacks Consensus Estimate for Horace Mann's earnings in 2025 is projected at $3.80 per share, with an expected increase of 19.50% compared to the previous year [5] Investment Considerations - Dividends are favored by investors as they enhance stock investing profits, reduce overall portfolio risk, and offer tax advantages [6] - While tech start-ups and high-growth companies rarely offer dividends, established companies like Horace Mann are more likely to provide consistent payouts [7] - The stock is currently rated with a Zacks Rank of 3 (Hold), indicating it is a compelling investment opportunity, particularly for income investors [7]

Financial Performance - First-quarter core earnings per share (EPS) reached $1.07, indicating strong growth momentum[6] - The company is on track to deliver record full-year core earnings[6] - Core return on equity (ROE) was 10.6%, a 4.9 percentage point improvement over the prior year[6,8] Segment Results - The P&C combined ratio improved by 10.5 points to 89.4% compared to the prior year[6,8] - Individual Supplemental sales increased by 61% year-over-year, demonstrating strong sales growth[8] - Total revenues increased by 8% year-over-year to $416 million, driven by an 8% increase in net premiums and contract charges earned[8] - First-quarter segment core earnings of Life & Retirement were $7.9 million, below prior year primarily due to higher mortality[20] - First-quarter segment net investment income of Individual Supplemental & Group Benefits was $9.4 million, 20.5% above the prior year[33] Capital Management and Investments - The company increased its annual dividend by 3% in March 2025, marking the 17th consecutive annual increase[8] - $7 million in shares were repurchased year-to-date[8] - Total net investment income on the managed portfolio increased by 15% year-over-year[8] Financial Position and Outlook - The company has $14.4 billion in assets[51] - Full-year 2025 core EPS guidance is set at $3.85 to $4.15, with core earnings expected to be between $160 million and $175 million[45]

Core Insights - Horace Mann (HMN) reported quarterly earnings of $1.07 per share, exceeding the Zacks Consensus Estimate of $0.88 per share, and up from $0.60 per share a year ago [1] - The earnings surprise for the quarter was 21.59%, and the company has surpassed consensus EPS estimates three times over the last four quarters [2] - Revenues for the quarter were $416.4 million, slightly missing the Zacks Consensus Estimate by 0.89%, but up from $386 million year-over-year [3] Earnings Performance - The company had a significant earnings surprise of 63.64% in the previous quarter, where actual earnings were $1.62 per share against an expectation of $0.99 [2] - The current consensus EPS estimate for the upcoming quarter is $0.58, with expected revenues of $431.4 million, and for the current fiscal year, the estimate is $3.80 on $1.73 billion in revenues [8] Stock Performance - Horace Mann shares have increased by approximately 7.6% since the beginning of the year, contrasting with a decline of 3.9% in the S&P 500 [4] - The stock currently holds a Zacks Rank of 3 (Hold), indicating expected performance in line with the market in the near future [7] Industry Outlook - The Insurance - Multi line industry, to which Horace Mann belongs, is currently ranked in the top 27% of over 250 Zacks industries, suggesting a favorable outlook compared to the bottom 50% [9] - Empirical research indicates a strong correlation between near-term stock movements and trends in earnings estimate revisions, which can be tracked by investors [6]

PART I [Item 1. Consolidated Financial Statements](index=3&type=section&id=Item%201.%20Consolidated%20Financial%20Statements) The consolidated financial statements for Q1 2025 reflect a slight asset decrease, significant net income growth, and robust operating cash flow [Consolidated Balance Sheets](index=3&type=section&id=Consolidated%20Balance%20Sheets) | Balance Sheet Highlights ($ in millions) | March 31, 2025 | December 31, 2024 | | :--- | :--- | :--- | | Total Investments | 7,007.4 | 6,916.4 | | Total Assets | 14,396.1 | 14,487.8 | | Total Liabilities | 13,053.3 | 13,200.3 | | Total Shareholders' Equity | 1,342.8 | 1,287.5 | - Total assets slightly decreased from **$14.49 billion** at the end of 2024 to **$14.40 billion** as of March 31, 2025. Total shareholders' equity increased to **$1.34 billion** from **$1.29 billion** over the same period, primarily due to net income and changes in accumulated other comprehensive income[9](index=9&type=chunk) [Consolidated Statements of Operations and Comprehensive Income (Loss)](index=5&type=section&id=Consolidated%20Statements%20of%20Operations%20and%20Comprehensive%20Income%20%28Loss%29) | Statement of Operations ($ in millions, except per share) | Q1 2025 | Q1 2024 | | :--- | :--- | :--- | | Total Revenues | 416.4 | 386.0 | | Total Benefits, Losses and Expenses | 368.9 | 353.0 | | Income Before Income Taxes | 47.5 | 33.0 | | Net Income | 38.2 | 26.5 | | Diluted EPS | $0.92 | $0.64 | - Net income increased by **44.2%** year-over-year, from **$26.5 million** in Q1 2024 to **$38.2 million** in Q1 2025. This resulted in a diluted earnings per share of **$0.92**, up from **$0.64** in the prior-year quarter[10](index=10&type=chunk) - Comprehensive income for Q1 2025 was **$69.3 million**, an increase from **$48.2 million** in Q1 2024, driven by both higher net income and a positive change in net unrealized investment gains on fixed maturity securities[10](index=10&type=chunk) [Consolidated Statements of Changes in Shareholders' Equity](index=6&type=section&id=Consolidated%20Statements%20of%20Changes%20in%20Shareholders%27%20Equity) - Total shareholders' equity increased from **$1,287.5 million** at the beginning of the period to **$1,342.8 million** at the end of Q1 2025[9](index=9&type=chunk)[12](index=12&type=chunk) - The company paid dividends of **$0.35 per share**, totaling **$14.7 million** in Q1 2025, an increase from **$0.34 per share** (**$14.3 million** total) in Q1 2024[12](index=12&type=chunk) [Consolidated Statements of Cash Flows](index=8&type=section&id=Consolidated%20Statements%20of%20Cash%20Flows) | Cash Flow Summary ($ in millions) | Q1 2025 | Q1 2024 | | :--- | :--- | :--- | | Net Cash Provided by Operating Activities | 140.8 | 74.5 | | Net Cash Used in Investing Activities | (35.1) | (59.5) | | Net Cash Used in Financing Activities | (113.5) | (24.3) | | Net Decrease in Cash | (7.8) | (9.3) | - Net cash from operating activities nearly doubled to **$140.8 million** in Q1 2025 from **$74.5 million** in Q1 2024, indicating stronger operational cash generation[15](index=15&type=chunk) [Notes to Consolidated Financial Statements](index=9&type=section&id=Notes%20to%20Consolidated%20Financial%20Statements) - The company operates in four reporting segments: Property & Casualty, Life & Retirement, Supplemental & Group Benefits, and Corporate & Other[19](index=19&type=chunk) - The most significant critical accounting estimates involve the valuation of hard-to-value fixed maturity securities, credit loss impairments, future policy benefit reserves, and property and casualty unpaid claims reserves[25](index=25&type=chunk) [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations (MD&A)](index=42&type=section&id=Item%202.%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations%20%28MD%26A%29) Management's discussion highlights Q1 2025 net income growth from Property & Casualty improvements and investment income, reaffirming full-year core earnings guidance and strong capital [Consolidated Financial Highlights & Results of Operations](index=43&type=section&id=Consolidated%20Financial%20Highlights%20%26%20Results%20of%20Operations) | Key Metrics | Q1 2025 | Q1 2024 | | :--- | :--- | :--- | | Total Revenues ($M) | 416.4 | 386.0 | | Net Income ($M) | 38.2 | 26.5 | | Diluted EPS | $0.92 | $0.64 | | Book Value per Share | $32.79 | $29.57 | - Net income increased by **$11.7 million** (**44.2%**) YoY, primarily due to improved Property & Casualty results from underwriting actions, favorable reserve development, and higher net investment income[110](index=110&type=chunk) - Net premiums and contract charges earned grew **8.4%** to **$298.3 million**, largely from rate and inflation adjustments in the Property & Casualty segment[112](index=112&type=chunk)[113](index=113&type=chunk) - Net investment income rose **10.0%** to **$115.9 million**, driven by strong returns from the fixed income portfolio and higher limited partnership returns[112](index=112&type=chunk)[114](index=114&type=chunk) [Outlook for 2025](index=46&type=section&id=Outlook%20for%202025) - The company estimates full-year 2025 core earnings will be in the range of **$3.85 to $4.15 per diluted share**, targeting a core return on equity of **10%+**[128](index=128&type=chunk) - Key assumptions for the 2025 outlook include: - P&C Auto combined ratio in the **mid-90s** and Property at or below **90** - Life & Retirement net interest spread between **220 and 230 bps** - Supplemental & Group Benefits blended benefit ratio of **39%** - Net investment income between **$470 million and $480 million** pre-tax[131](index=131&type=chunk) [Results of Operations by Segment](index=47&type=section&id=Results%20of%20Operations%20by%20Segment) | Segment Core Earnings ($ in millions) | Q1 2025 | Q1 2024 | | :--- | :--- | :--- | | Property & Casualty | 26.8 | 10.6 | | Life & Retirement | 7.9 | 9.9 | | Supplemental & Group Benefits | 14.0 | 13.8 | | Corporate & Other (Loss) | (4.0) | (8.5) | - The Property & Casualty segment's net income surged to **$26.8 million** from **$10.6 million**, driven by a significantly improved combined ratio of **89.4%** and **$5.3 million** of favorable prior years' reserve development[139](index=139&type=chunk)[140](index=140&type=chunk)[142](index=142&type=chunk) - The Life & Retirement segment's net income decreased to **$6.8 million** from **$11.7 million**, primarily due to an unfavorable market risk benefit adjustment and higher mortality costs[152](index=152&type=chunk) - The Supplemental & Group Benefits segment's net income was stable at **$11.2 million**. A lower benefits ratio in individual supplemental products was offset by a higher benefits ratio in group benefits due to increased long-term disability claims[161](index=161&type=chunk) [Investment Results](index=55&type=section&id=Investment%20Results) - Net investment income from the managed portfolio increased **14.5%** to **$91.5 million** in Q1 2025, primarily due to higher returns in the limited partnership portfolio[167](index=167&type=chunk) - The total fixed maturity and equity securities portfolio was valued at **$5.52 billion** as of March 31, 2025, with **94.8%** of the portfolio rated investment grade[170](index=170&type=chunk)[171](index=171&type=chunk)[172](index=172&type=chunk) - Pretax net unrealized investment losses on fixed maturity securities decreased to **$400.0 million** from **$442.7 million** at year-end 2024, mainly due to a decrease in US Treasury rates[167](index=167&type=chunk)[168](index=168&type=chunk) [Liquidity and Capital Resources](index=59&type=section&id=Liquidity%20and%20Capital%20Resources) - Total capital was **$1.89 billion** as of March 31, 2025, with long-term debt of **$547.2 million**. The debt-to-total capital ratio was **29.0%**[193](index=193&type=chunk) - Shareholders' equity was **$1.34 billion**, with a book value per share of **$32.79**. The company holds **$1.2 billion** in highly liquid assets (cash, U.S. government securities, public equities)[189](index=189&type=chunk)[194](index=194&type=chunk) - In Q1 2025, the company paid dividends of **$14.3 million** and repurchased **3,240 shares** for approximately **$0.1 million**. **$26.2 million** remains authorized for future share repurchases[195](index=195&type=chunk)[196](index=196&type=chunk)[216](index=216&type=chunk) - The insurance subsidiaries can pay up to **$148.8 million** in dividends to the holding company in 2025 without prior regulatory approval, of which **$22.0 million** was paid in Q1[192](index=192&type=chunk) [Item 3. Quantitative and Qualitative Disclosures About Market Risk](index=65&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) The company's primary market risk is market value risk on invested assets, managed by aligning asset and liability cash flows and durations, with no material changes from prior year-end - The primary market risk exposure is market value risk, stemming from potential decreases in the value of invested assets[206](index=206&type=chunk) - The company manages risk by matching the projected cash inflows of assets with the projected cash outflows of liabilities, while maintaining reasonable durations and diversification[208](index=208&type=chunk) [Item 4. Controls and Procedures](index=66&type=section&id=Item%204.%20Controls%20and%20Procedures) Management, including the CEO and CFO, concluded that disclosure controls and procedures were effective as of March 31, 2025, with no material weaknesses or significant changes in internal control - Based on an evaluation as of March 31, 2025, the CEO and CFO concluded that the company's disclosure controls and procedures are effective[210](index=210&type=chunk) - There were no changes in internal control over financial reporting during the quarter that have materially affected, or are reasonably likely to materially affect, these controls[211](index=211&type=chunk) PART II - OTHER INFORMATION [Item 1. Legal Proceedings](index=67&type=section&id=Item%201.%20Legal%20Proceedings) The company is defending against litigation and claims related to legacy commercial lines policies following the 2023 liquidation of R&Q Reinsurance Company, which had assumed these obligations - The company is defending against a lawsuit and various claims related to legacy commercial lines policies (asbestos, environmental, sexual molestation) from the late 1960s and early 1970s[97](index=97&type=chunk) - These issues arose following the March 2023 liquidation of R&Q Reinsurance Company, which had assumed these obligations through a series of transactions. The company recorded **$15.7 million** in after-tax costs related to these matters in Q4 2024[98](index=98&type=chunk)[99](index=99&type=chunk) [Item 1A. Risk Factors](index=67&type=section&id=Item%201A.%20Risk%20Factors) There have been no material changes to the risk factors previously disclosed in the Annual Report on Form 10-K for the year ended December 31, 2024 - There are no material changes from the risk factors disclosed in the Annual Report on Form 10-K for the year ended December 31, 2024[215](index=215&type=chunk) [Item 2. Unregistered Sales of Equity Securities and Use of Proceeds](index=67&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) During Q1 2025, the company repurchased 3,240 shares of common stock under its authorized program, with approximately $26.2 million remaining for future repurchases | Period | Shares Purchased | Average Price Paid | Total Value ($) | Remaining Authorization ($M) | | :--- | :--- | :--- | :--- | :--- | | Jan 2025 | 0 | N/A | 0 | 26.3 | | Feb 2025 | 3,140 | $40.01 | 125,631 | 26.2 | | Mar 2025 | 100 | $40.01 | 4,001 | 26.2 | | **Q1 Total** | **3,240** | **$40.01** | **129,632** | **26.2** | [Item 5. Other Information](index=67&type=section&id=Item%205.%20Other%20Information) No director or executive officer adopted, modified, or terminated a Rule 10b5-1 trading arrangement during the first quarter of 2025 - No director or officer required to file Section 16 reports adopted, modified, or terminated a Rule 10b5-1 trading arrangement during the three months ended March 31, 2025[218](index=218&type=chunk) [Item 6. Exhibits](index=68&type=section&id=Item%206.%20Exhibits) This section lists all exhibits filed with the Form 10-Q, including corporate documents, agreements, plans, and certifications by the CEO and CFO - The filing includes certifications from the CEO (Marita Zuraitis) and CFO (Ryan E. Greenier) pursuant to Sections 302 and 906 of the Sarbanes-Oxley Act of 2002[224](index=224&type=chunk) - A glossary of selected terms is filed as Exhibit 99.1[224](index=224&type=chunk)