Benzinga | Jul 1, 2021 04:17PM EDT

Horace Mann Raises 2021 EPS Guidance From $3.00-$3.20 To $3.50-$3.70

Horace Mann Educators Corporation (NYSE:HMN) today announced it is raising guidance for its 2021 EPS by more than 15% to $3.50 to $3.70 from $3.00 to $3.20, with continued strong performance across all segments. The increased guidance largely is attributable to strong second-quarter net investment income returns and lower-than-guided second-quarter catastrophe losses. The company now expects 2021 core return on equity will be above 10%.

"Horace Mann's alternatives portfolio generated outsized returns in the second quarter, primarily benefiting the Property and Casualty segment," said President and CEO Marita Zuraitis. "Driving higher investment income through increasing our alternative investments portfolio allocation is a strategic driver of sustained double-digit return on equity. Still, several private equity funds saw realizations significantly above expectations during the quarter, leading to the strong return on the alternatives portfolio."

The revised full-year 2021 guidance assumes total net investment income will increase to the range of $385 million to $405 million due to second-quarter results, compared with the prior guidance of $370 million to $390 million.

"In addition, we now expect catastrophe losses for the just-ended second quarter will be approximately $15 million to $18 million, significantly below what we had planned when we previously outlined our guidance for full-year 2021," Zuraitis continued. "The 17 events designated as catastrophes in this year's second quarter by Property Claims Services (PCS) were generally less severe and not as widespread as the 20 declared catastrophe events in last year's second quarter."

The revised full-year 2021 guidance reflects the company's assumption that second-half catastrophe losses will contribute between $20 million and $25 million, unchanged from previous guidance and in line with the 10-year average for second-half catastrophe losses.

"Our original 2021 guidance anticipated Auto and Supplemental loss ratios would gradually return toward pre-pandemic levels as policyholders resume more normal driving patterns and utilize more healthcare services, respectively," Zuraitis said. "In line with industry experience, we are seeing clear signs that Auto loss ratios are on the anticipated path to pre-pandemic levels, but Supplemental policyholder behavior appears to be responding to the post-vaccine environment more slowly than we had expected. We will provide additional commentary on the effect of these trends and other factors related to segment-level guidance when we report second-quarter results.

"We remain focused on our long-term objective of a sustainable double-digit return on equity," Zuraitis concluded. "Midway through the year, we continue to see signs that our unwavering commitment to the education market, and multi-year emphasis on products, distribution and infrastructure, is setting the stage for success in the post-vaccine environment."