Horace Mann(US:HMN)2022-02-02 20:08Financial Data and Key Metrics Changes - The company reported fourth quarter core earnings of $0.97 and full year 2021 core earnings of $3.59 per diluted share, marking the second consecutive year of record earnings with a core return on equity exceeding 10% [7][39]. - The guidance for 2022 EPS is projected to be in the range of $3.45 to $3.65, with ROE near 10% [35][62]. Business Line Data and Key Metrics Changes - The Property & Casualty (P&C) segment reported premiums of $608 million for 2021, with a combined ratio of 99.9% in the fourth quarter, despite catastrophe losses being nearly double that of the previous year [41][43]. - The Supplemental segment's full year core earnings were $46 million, up 7% from the prior year, with fourth quarter premiums contributing $31 million and core earnings of $12 million [48][49]. - The Retirement segment saw annuity contract deposits increase by 5% for the year, with core earnings excluding DAC unlocking rising by 90% [51]. Market Data and Key Metrics Changes - The company serves approximately 1 million households, primarily educators, with a focus on expanding its market share in the education sector [20][21]. - The auto loss ratio for the fourth quarter was reported at 79.3%, an increase of 11.9 points compared to the prior year, attributed to increased miles driven and claims frequency [43][44]. Company Strategy and Development Direction - The company aims for 10% average annual EPS growth and sustained double-digit ROEs, supported by a strategic roadmap focused on enhancing product offerings and distribution [7][10]. - The acquisition of Madison National Life is expected to strengthen the company's value proposition and expand growth opportunities in the education market [15][18]. Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in achieving strong results in 2022, despite challenges such as higher auto loss ratios and inflationary pressures [13][35]. - The company anticipates steady progress in supplemental sales and a focus on cross-selling opportunities to enhance customer retention [50][29]. Other Important Information - The company has been included in the Bloomberg Gender Equality Index for four consecutive years, reflecting its commitment to diversity and inclusion [36]. - Corporate expenses in the fourth quarter were slightly above normal due to costs associated with the Madison National acquisition, with plans for strategic spending in 2022 [59][100]. Q&A Session Summary Question: Discussion on rate versus loss trend in personal auto - Management acknowledged the return of auto loss costs to pre-pandemic levels and discussed the timing of corrective actions to address severity and inflationary pressures [74][75]. Question: Update on expense structure and technology transformation - Management highlighted their effective expense management and strategic spending plans, including modernization efforts and the integration of Madison National [97][100]. Question: Impact of agent retention amid industry changes - Management reported steady agency count and effective recruiting efforts, indicating resilience despite external pressures [107]. Question: Clarification on loss ratios for voluntary and employer-paid products - Management provided insights into the mix of new sales between voluntary and employer-paid products, indicating a shift towards individual products in 2022 [112].