Horace Mann(US:HMN)2023-11-03 19:10Financial Data and Key Metrics Changes - The company reported third quarter core earnings of $0.44 per diluted share, with net written premiums rising by 9% [7][51] - Net investment income increased by 22% to a record $119 million [8][51] - The company continues to expect full year core EPS in the range of $1.20 to $1.45 [8][51] Business Line Data and Key Metrics Changes - In the supplemental and group benefits division, sales doubled year-over-year, with significant growth in employer-sponsored products, which saw a 109% increase [10][42] - The property and casualty (P&C) segment experienced a 13% rise in total written premiums, with auto average written premiums increasing by 16% year-over-year [28][30] - The Life and Retirement segment reported adjusted core earnings of $21 million, with net annuity contract deposits up 16% to $126 million [36][39] Market Data and Key Metrics Changes - The company noted stable retention rates in both auto and property lines despite rate increases [29][20] - The underlying loss ratio for property was reported at 61.8%, reflecting increased non-cat weather activity compared to the prior year [33] Company Strategy and Development Direction - The company aims to return the P&C segment to profitability by implementing rate increases and product changes, targeting a long-term combined ratio of 92% to 93% by 2025 [11][35] - The strategy includes enhancing digital capabilities and integrating various sales channels to improve lead generation and conversion [62][67] - The company is focused on maintaining a diversified business model to provide comprehensive solutions for educators [22][25] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in achieving a return on equity near 10% in 2024, despite challenges in the P&C environment [8][25] - The company highlighted the importance of adapting to changing market conditions and maintaining flexibility in pricing strategies [81][82] Other Important Information - The company completed a $300 million senior debt issuance to repay existing credit facilities and enhance invested assets [46] - Adjusted book value was reported at $35.57, reflecting the intrinsic value of the business [50] Q&A Session Summary Question: Can you talk about the diversification benefit of meeting your insured's needs with all the insurance products in the suite? - Management emphasized the importance of a diversified product portfolio and how it has positively impacted earnings, especially in the current P&C environment [56][59] Question: Can you provide examples of states with the greatest price adequacy? - Management indicated that most states are expected to achieve rate adequacy by mid-next year, with concerns in states like Georgia and California due to regulatory limitations [75][80] Question: What trends are being seen in new teachers entering the workforce and agent recruitment? - Management noted that while the teacher shortage is a challenge, it provides opportunities for recruitment, with agent recruitment numbers up 50% year-over-year [86][92] Question: How should we look at the expense ratio moving forward? - Management stated that the expense ratio is expected to remain consistent around 27% to 27.5%, with a focus on balancing operational expenses and strategic growth initiatives [94][96] Question: Can you comment on the moderation of vehicle repair and replacement costs? - Management reported that vehicle repair costs are moderating primarily due to lower parts costs, although labor costs remain a pressure point [104]