Horace Mann(US:HMN)2021-02-03 21:03Financial Data and Key Metrics Changes - The company reported fourth quarter core earnings of $1.13 per diluted share, a significant increase over the prior year, contributing to full-year 2020 core earnings of $3.40 per diluted share, more than 50% higher than the prior year and the highest annual core earnings ever [9][32] - Core return on equity increased to 10.5%, up from 7.3% in 2019 [9] Business Line Data and Key Metrics Changes - Property and Casualty (P&C) core earnings were up 40.9% for the year, reflecting a 3.8-point improvement in the reported combined ratio [35] - Supplemental segment added $130.7 million in premiums and $43.1 million to core earnings, with premium persistency rising to 90.5% [48] - Life segment core earnings were on track with expectations at $10.2 million, with sales below last year in the fourth quarter [52] Market Data and Key Metrics Changes - Premiums for the P&C segment were down about 7% due to lower new sales and pandemic-related premium credits [36] - Annuity contract deposits were up 4.5% for the year, indicating continued interest from educator customers [56] Company Strategy and Development Direction - The company is focused on leveraging strategic enhancements made over the past several years to optimally position for growth, including the rollout of a new P&C administration system and the integration of Supplemental agents [21][22] - The commitment to diversity, equity, and inclusion was emphasized, with initiatives such as establishing a DEI Council and unconscious bias training for leaders [27][29] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in returning to growth post-pandemic, citing strategic initiatives and improved relationships with the education community [70][81] - The guidance for 2021 core earnings per share is in the range of $3.00 to $3.20, reflecting expectations for recovery from pandemic effects and continued progress on strategic initiatives [19][34] Other Important Information - The company highlighted the importance of adapting to the changing educational environment and providing solutions to educators facing challenges due to the pandemic [12][17] - The company reported a commitment to capital generation and shareholder value creation, with plans for dividends and opportunistic share buybacks [64] Q&A Session Summary Question: Growth post-pandemic - Management discussed the focus on growth and the strategic initiatives in place to leverage a leadership position within the education market [68][71] Question: ROE definition and guidance - ROE is calculated based on fixed income realized gains and average equity, with guidance reflecting targeted capital levels [82][84] Question: Recovery in claim frequency - Management expects a gradual recovery in claim frequency and growth in both P&C and Supplemental segments throughout 2021 [87][88] Question: Impact of behavioral changes on Supplemental products - Management noted that the pandemic has influenced behavior but believes the need for coverage will remain stable [95][98] Question: Physical versus virtual school environments - Management indicated that while schools are operating in various environments, there is a strong belief in the necessity of physical education [104][106] Question: Catastrophe loss assumptions - The higher catastrophe load assumption for 2021 is based on historical averages and recent experiences, not on early 2021 data [108][109]