Horace Mann(US:HMN)2024-11-06 00:20Financial Data and Key Metrics Changes - The company reported third quarter core earnings of $0.76 per diluted share, a 73% increase over the prior year, and revenues were up 9% [6][26] - The company maintains guidance for full year core EPS in the range of $2.40 to $2.70 [7][26] - The annualized return on equity for the third quarter was 8.4%, a 3.4-point improvement over the prior year [40] Business Line Data and Key Metrics Changes - In the Property & Casualty segment, net written premiums increased by 13% to $212 million, with a reported combined ratio of 97.9%, improving 19 points over the prior year [27] - The Auto segment saw net written premiums of $129 million, a 9% increase, with a combined ratio of 92.8%, improving 16 points [30] - The Life & Retirement segment contributed $14.8 million to core earnings, with a slight increase in net written premiums and contract deposits of $156 million [33] - The Supplemental & Group Benefits segment also contributed $14.8 million to core earnings, although this was a decrease of 6% due to a higher blended benefits ratio [35] Market Data and Key Metrics Changes - The company reported a 24% increase in Auto sales and a 14% increase in Life sales during the third quarter [15] - The number of covered lives in the employer-sponsored business grew to 842,000, a 2% increase over the prior year [19] Company Strategy and Development Direction - The company aims for a larger share of the education market and a sustainable double-digit shareholder return on equity by 2025 [7][24] - The company is focused on maintaining expense discipline while investing in growth opportunities [24][41] - The multiline approach is emphasized as a unique value proposition, enabling the company to support educators and achieve financial success [13][14] Management's Comments on Operating Environment and Future Outlook - Management acknowledged the impact of Hurricane Helene, estimating $22.5 million in damages for policyholders, but highlighted the effective response from the claims team [8] - The company expects to reach an inflection point in Auto policy growth by late 2025, with mid-single-digit rate increases anticipated to keep pace with loss trends [12][32] - Management expressed confidence in achieving target profitability across all segments by 2025 [42] Other Important Information - The company launched HMScore, an online platform to help educators build strong credit habits [23] - The company has repurchased 256,000 shares at a total cost of $8.5 million year-to-date [41] Q&A Session Summary Question: Core loss ratio within Personal Auto - Management discussed the strong prior year reserve releases and moderating loss trends, indicating that the company is a quarter or two behind larger competitors in rate changes [43][49] Question: Life & Retirement segment deposits - Management explained that the mix of business in the 403(b) and annuity spaces is consistent, with variable annuity deposits showing variability based on case size [53][55] Question: Growth opportunities in segments - Management highlighted increased agent productivity, web traffic, and digital tools as key factors for growth in both Auto and Supplemental & Group Benefits segments [59][61] Question: Commercial real estate and loan income stabilization - Management noted early signs of stabilization in commercial mortgage loans, with a good quarterly return and expectations for future gains [71][72] Question: Share purchases going into Q4 - Management indicated a clear line of sight to sustainable double-digit ROEs in 2025, prioritizing growth and maintaining a compelling dividend while being opportunistic with share buybacks [76][78]