Business Wire | Nov 2, 2020 04:16PM EST

Horace Mann Reports Third-Quarter 2020 Net Income of $0.87 Per Share and Core Earnings* of $0.82 Per Share

Nov. 02, 2020

SPRINGFIELD, Ill.--(BUSINESS WIRE)--Nov. 02, 2020--Horace Mann Educators Corporation (NYSE:HMN) today reported financial results for the quarter ended September 30, 2020:

Horace Mann Consolidated Financial Highlights

Three Months Ended Nine Months Ended September 30, September 30,

($ inmillions, % %except per 2020 2019 Change 2020 2019 Changeshareamounts)

Total $ 337.1 $ 336.6 0.1 % $ 958.1 $ 1,105.4 -13.3 %revenues

Net income 36.5 25.4 43.7 % 85.5 151.4 -43.5 %

Netinvestmentgains 1.9 (1.6 ) N.M. (10.1 ) 118.9 N.M. (losses)after tax

Goodwill - - - - (28.0 ) N.M. impairment

Core 34.6 27.0 28.1 % 95.6 60.5 58.0 %earnings*

Per diluted share:

Net income 0.87 0.60 45.0 % 2.03 3.61 -43.8 %

Netinvestmentgains 0.05 (0.04 ) N.M. (0.24 ) 2.84 N.M. (losses)after tax

Goodwill - - - - (0.67 ) N.M. impairment

Coreearnings per 0.82 0.64 28.1 % 2.27 1.44 57.6 %dilutedshare*

Book value 41.45 38.30 8.2 %per share

Book valueper shareexcludingnetunrealized 33.52 31.84 5.3 %investmentgains onfixedmaturitysecurities*

N.M. - Not meaningful.

* These measures are not based on accounting principles generally accepted in the United States of America (non-GAAP). They are reconciled to the most directly comparable GAAP measures in the Appendix to the Investor Supplement. An explanation of these measures is contained in the Glossary of Selected Terms included as an exhibit in the Company's reports filed with the Securities and Exchange Commission.

"Educators are facing new challenges in their professional lives as they work to meet students' needs in a vast array of new structures and environments due to the COVID-19 pandemic," said Marita Zuraitis, Horace Mann President and CEO. "As a company dedicated to helping educators protect what they have today and prepare for a successful tomorrow, much of our attention this quarter was directed at working with schools to find the best way to serve educators who continue to work remotely. We are uniquely positioned to do this because of our solutions-based approach, which emphasizes relationships over individual transactions and is supported by continued expansion of robust virtual capabilities such as e-Signature and e-applications.

"This quarter, we delivered on this promise by helping customers affected by the numerous catastrophe events across the country repair their homes - which may also be their classrooms - helping to return some sense of normalcy in a challenging time," Zuraitis added. "In addition, we expanded access to our Student Loan Solutions program, offered more virtual financial wellness seminars and finished integrating Supplemental agents under the Horace Mann umbrella, paving the way for them to offer more solutions to their clients.

"Our third-quarter results were strong in part because Auto frequency remains lower than historic averages due to the pandemic's impact on driving patterns. But underneath that unusual trend, we are benefiting from a stronger foundation, the result of our long-term strategic plan to enhance our product offerings, strengthen our distribution and modernize our infrastructure - including last year's addition of our Supplemental segment and our annuity reinsurance transaction," Zuraitis said. "Annuity contract deposits remain strong, although the impact of the largely remote educator workforce in a pre-vaccine environment is temporarily slowing our top-line growth. However, we are taking what we're learning about virtual educator engagement and incorporating it into our go-forward plans.

"Based on the strong results as well as a higher expected fourth-quarter contribution from the Supplemental segment, we increased our full-year 2020 core EPS guidance range to $2.95 to $3.15," Zuraitis added. "These strong results keep us on track to our planned achievement of one full point of ROE improvement this year from our strategic actions. There will also be about one to one and a half points of ROE this year from pandemic-related and other factors that largely won't repeat. Looking ahead, 2021 ROE will be on the original path we had anticipated, heading toward our double-digit ROE target."

N.M. - Not meaningful.

* These measures are not based on accounting principles generally accepted inthe United States of America (non-GAAP). They are reconciled to the mostdirectly comparable GAAP measures in the Appendix to the Investor Supplement.An explanation of these measures is contained in the Glossary of Selected Termsincluded as an exhibit in the Company's reports filed with the Securities andExchange Commission.

"Educators are facing new challenges in their professional lives as they work to meet students' needs in a vast array of new structures and environments due to the COVID-19 pandemic," said Marita Zuraitis, Horace Mann President and CEO. "As a company dedicated to helping educators protect what they have today and prepare for a successful tomorrow, much of our attention this quarter was directed at working with schools to find the best way to serve educators who continue to work remotely. We are uniquely positioned to do this because of our solutions-based approach, which emphasizes relationships over individual transactions and is supported by continued expansion of robust virtual capabilities such as e-Signature and e-applications.

"This quarter, we delivered on this promise by helping customers affected by the numerous catastrophe events across the country repair their homes - which may also be their classrooms - helping to return some sense of normalcy in a challenging time," Zuraitis added. "In addition, we expanded access to our Student Loan Solutions program, offered more virtual financial wellness seminars and finished integrating Supplemental agents under the Horace Mann umbrella, paving the way for them to offer more solutions to their clients.

"Our third-quarter results were strong in part because Auto frequency remains lower than historic averages due to the pandemic's impact on driving patterns. But underneath that unusual trend, we are benefiting from a stronger foundation, the result of our long-term strategic plan to enhance our product offerings, strengthen our distribution and modernize our infrastructure - including last year's addition of our Supplemental segment and our annuity reinsurance transaction," Zuraitis said. "Annuity contract deposits remain strong, although the impact of the largely remote educator workforce in a pre-vaccine environment is temporarily slowing our top-line growth. However, we are taking what we're learning about virtual educator engagement and incorporating it into our go-forward plans.

"Based on the strong results as well as a higher expected fourth-quarter contribution from the Supplemental segment, we increased our full-year 2020 core EPS guidance range to $2.95 to $3.15," Zuraitis added. "These strong results keep us on track to our planned achievement of one full point of ROE improvement this year from our strategic actions. There will also be about one to one and a half points of ROE this year from pandemic-related and other factors that largely won't repeat. Looking ahead, 2021 ROE will be on the original path we had anticipated, heading toward our double-digit ROE target."

Property and Casualty Segment Third-Quarter Combined Ratio at 96.5% DespiteHigher Catastrophe Losses

(All comparisons vs. same period in 2019, unless noted otherwise)

Three Months Ended Nine Months Ended September 30, September 30,

($ in 2020 2019 Change 2020 2019 Changemillions)



PropertyandCasualty $ 172.8 $ 182.5 -5.3 % $ 482.5 $ 518.5 -6.9 %writtenpremiums*

PropertyandCasualty 15.8 14.2 11.3 % 53.7 34.3 56.6 %net income/ coreearnings*

PropertyandCasualty 96.5 % 96.2 % 0.3 pts 93.5 % 98.5 % -5.0 ptscombinedratio

PropertyandCasualty 54.7 % 63.3 % -8.6 pts 53.6 % 64.0 % -10.4 ptsunderlyingloss ratio*

PropertyandCasualty 25.2 % 26.4 % -1.2 pts 25.8 % 26.7 % -0.9 ptsexpenseratio

PropertyandCasualty 20.9 % 8.6 % 12.3 pts 16.0 % 9.3 % 6.7 ptscatastrophelosses

PropertyandCasualty 79.9 % 89.7 % -9.8 pts 79.4 % 90.7 % -11.3 ptsunderlyingcombinedratio*

Autocombined 83.3 % 92.4 % -9.1 pts 85.3 % 97.0 % -11.7 ptsratio

Autounderlying 56.8 % 66.7 % -9.9 pts 58.1 % 70.2 % -12.1 ptsloss ratio*

Propertycombined 121.7 % 104.3 % 17.4 pts 109.6 % 102.0 % 7.6 ptsratio

Propertyunderlying 50.8 % 55.6 % -4.8 pts 44.9 % 50.6 % -5.7 ptsloss ratio*

Property and Casualty written premiums declined as lower new business more than offset the return of the reinstatement premiums related to the PG&E subrogation recovery. The Auto policy retention rate of 80.9% was unchanged from last year, while the Property retention rate of 86.7% was slightly below recent experience.

Overall, segment core earnings for the quarter rose 11.3% due to higher net investment income, driven by favorable limited partnership returns. The combined ratio was essentially flat with last year as unusually low underlying loss ratios and higher favorable prior years' reserve development overall offset significantly higher catastrophe losses. The underlying auto loss ratio reflected lower frequency related to changing driving patterns due to COVID-19, as well as the ongoing benefit of profitability initiatives. The underlying property loss ratio improved primarily due to the return of the reinsurance reinstatement premium. In addition, the mix of perils this year reflected more frequent, but less severe, non-catastrophe fire losses.

As a result of the emergence of PG&E Corporation and Pacific Gas and Electric Company (together, PG&E) from bankruptcy on July 1, 2020, in the third quarter of 2020, Horace Mann recognized favorable prior years' reserve development of $5.2 million, pretax and net of reinsurance, along with the return of reinsurance reinstatement premiums of $3.5 million, for a total of $8.7 million, largely related to the 2018 Camp Fire in California. Results reported in 2018 reflected gross losses of $150.0 million and net losses after reinsurance of $37.9 million pretax from the Camp Fire.

Offsetting the improved underlying loss ratio were $34.8 million of catastrophe losses that added 21 points to the combined ratio. Of the 30 catastrophes in the quarter, the most notable were Hurricane Laura and the Midwest derecho, which combined accounted for nearly $20 million of the losses.

Catastrophe losses through the first nine months of 2020 have totaled $78.3 million. The company's full-year 2020 guidance continues to reflect a catastrophe loss assumption of $85 to $90 million, which could be as much as 13 to 14 points on the full-year combined ratio.

Supplemental Segment Contributes $10.6 Million to Third-Quarter Earnings

On July 1, 2019, Horace Mann acquired NTA Life Enterprises, LLC (NTA), which became the company's Supplemental segment. The segment continues to provide supplemental insurance products to the education market, building on NTA's nearly 50 years of experience in the sector. The segment specializes in developing, marketing and underwriting supplemental insurance products, including cancer, heart, limited supplemental disability and accident.

Three Months Ended Nine Months Ended September 30, September 30,

($ in 2020 2019 Change 2020 2019 Changemillions)



Supplemental $ 1.4 $ 3.6 -61.1 % $ 5.8 $ 3.6 N/Asales*

Earned 32.5 32.9 -1.2 % 98.8 32.9 N/Apremiums

Supplementalnet income / 10.6 6.9 53.6 % 30.6 6.9 N/Acore earnings*

Pretax profit 36.3 % 23.7 % 12.6 pts 34.7 % 23.7 % N/Amargin ^(1)

N/A - The acquisition of NTA closed on July 1, 2019.(1)

Measured to total revenues.

Supplemental segment sales were $1.4 million for the quarter, showing a modest rebound from second quarter but reflecting continued lower sales volume due to limited school access because of COVID-19. Persistency was up slightly at 90.1%.

Strong core earnings reflected continued favorable business trends as well as some short-term benefit from changes in policyholder behavior due to COVID-19. Segment expenses include the non-cash impact of amortization of intangible assets under purchase accounting that reduces quarterly core earnings by $3.1 million pretax. The pretax profit margin remains slightly above management's longer-term expectations because of the pandemic-related changes in policyholder behavior.

Retirement Segment Sees 6.9% Increase in Annuity Contract Deposits

(All comparisons vs. same period in 2019, unless noted otherwise)

N/A - The acquisition of NTA closed on July 1, 2019.^(1) Measured to total revenues.

Supplemental segment sales were $1.4 million for the quarter, showing a modest rebound from second quarter but reflecting continued lower sales volume due to limited school access because of COVID-19. Persistency was up slightly at 90.1%.

Strong core earnings reflected continued favorable business trends as well as some short-term benefit from changes in policyholder behavior due to COVID-19. Segment expenses include the non-cash impact of amortization of intangible assets under purchase accounting that reduces quarterly core earnings by $3.1 million pretax. The pretax profit margin remains slightly above management's longer-term expectations because of the pandemic-related changes in policyholder behavior.

Retirement Segment Sees 6.9% Increase in Annuity Contract Deposits

(All comparisons vs. same period in 2019, unless noted otherwise)

Three Months Ended Nine Months Ended September 30, September 30,

($ in 2020 2019 Change 2020 2019 Changemillions)



Annuitycontract $ 137.2 $ 128.3 6.9 % $ 366.7 $ 344.6 6.4 %deposits*

Annuity assetsunder 4,508.7 4,215.9 6.9 %management ^(1)

Total assetsunder 8,032.6 7,897.7 1.7 %administration^(2)

Retirement net 7.8 5.9 32.2 % 16.6 (6.9 ) N.M.income (loss)

Retirement 7.8 5.9 32.2 % 16.6 21.1 -21.3 %core earnings*

Retirementcore earnings 7.3 5.9 23.7 % 15.6 23.9 -34.7 %excluding DACunlocking*

N.M. - Not meaningful.(1)

Amount reported as of September 30, 2020 excludes $660.1 of assets under management held under modified coinsurance reinsurance.

(2)

Includes Annuity AUM, Brokerage and Advisory AUA, and Recordkeeping AUA.

Annuity contract deposits for the quarter rose 6.9% over prior year. Educators continue to find value in our Retirement savings products, including our competitively priced variable annuities with no surrender charges. Total cash value persistency remained strong at 94.8% for variable annuities and 94.5% for fixed annuities.

Reflecting the 2019 annuity reinsurance transaction, Horace Mann currently has $4.5 billion in annuity assets under management, including $2.2 billion of fixed annuities, $1.8 billion of variable annuities and $0.5 billion of fixed indexed annuities. Assets under administration, which includes advisory and recordkeeping assets added through the acquisition of BCG in 2019, were down 2.9% from year-end 2019.

Reflecting the benefits of the reinsurance transaction, the net interest margin on the retained annuity business was essentially unchanged from a year ago despite lower net investment income.

The segment recorded net income of $7.8 million for the quarter, up substantially from last year due primarily to expense savings. Core earnings excluding DAC unlocking for the quarter was also ahead of last year.

N.M. - Not meaningful.^ Amount reported as of September 30, 2020 excludes $660.1 of assets under(1) management held under modified coinsurance reinsurance.

^ Includes Annuity AUM, Brokerage and Advisory AUA, and Recordkeeping AUA.(2)

Annuity contract deposits for the quarter rose 6.9% over prior year. Educators continue to find value in our Retirement savings products, including our competitively priced variable annuities with no surrender charges. Total cash value persistency remained strong at 94.8% for variable annuities and 94.5% for fixed annuities.

Reflecting the 2019 annuity reinsurance transaction, Horace Mann currently has $4.5 billion in annuity assets under management, including $2.2 billion of fixed annuities, $1.8 billion of variable annuities and $0.5 billion of fixed indexed annuities. Assets under administration, which includes advisory and recordkeeping assets added through the acquisition of BCG in 2019, were down 2.9% from year-end 2019.

Reflecting the benefits of the reinsurance transaction, the net interest margin on the retained annuity business was essentially unchanged from a year ago despite lower net investment income.

The segment recorded net income of $7.8 million for the quarter, up substantially from last year due primarily to expense savings. Core earnings excluding DAC unlocking for the quarter was also ahead of last year.

Life Segment Mortality Costs in Line with Expectations

(All comparisons vs. same period in 2019, unless noted otherwise)

Three Months Ended Nine Months Ended September 30, September 30,

($ in millions) 2020 2019 Change 2020 2019 Change



Life sales* $ 2.7 $ 4.4 -38.6 % $ 9.6 $ 13.7 -29.9 %

Life mortality costs 9.0 8.4 7.1 % 28.3 26.4 7.2 %

Life net income / core 4.3 5.1 -15.7 % 6.8 13.6 -50.0 %earnings*

Life sales were down $1.7 million for the quarter. Life core earnings* reflected mortality costs in line with expectations; the company had favorable mortality experience in the third quarter of 2019. Life persistency of 95.7% was consistent with the prior year period.

Investment Portfolio Well-Positioned for Potential Market Disruption and Economic Downturn

Total net investment income includes net investment income on the investment portfolio managed by Horace Mann as well as accreted investment income on the deposit asset on reinsurance related to the company's 2019 reinsurance of a block of approximately $2.9 billion of policy liabilities related to legacy individual annuities written in 2002 or earlier that was effective April 1, 2019.

(All comparisons vs. same period in 2019, unless noted otherwise)

Three Months Ended Nine Months Ended September 30, September 30,

($ in 2020 2019 Change 2020 2019 Changemillions)



Pretax netinvestmentincome - $ 69.2 $ 69.2 - % $ 184.3 $ 232.3 -20.7 %investmentportfolio

Pretaxinvestmentincome - 24.5 23.8 2.9 % 72.1 47.0 53.4 %depositasset onreinsurance

Totalpretax net 93.7 93.0 0.8 % 256.4 279.3 -8.2 %investmentincome

Pretax netinvestment 2.5 (2.1 ) N.M. (12.8 ) 151.6 N.M. gains(losses)

Pretax netunrealizedinvestmentgains 496.2 386.1 28.5 %(losses) onfixedmaturitysecurities

Investmentyield,excludinglimited 4.18 % 4.62 % -0.44pts 4.36 % 4.73 % -0.37ptspartnershipinterests,pretax -annualized

N.M. - Not meaningful.

Total net investment income rose slightly year-over-year. Net investment income on the managed portfolio was comparable with last year as favorable returns on limited partnership investments offset slightly lower yields on fixed maturity investments.

Third-quarter pretax net investment gains were $2.5 million, including $1.1 million in other-than-temporary impairment charges. The company's fixed maturity securities portfolio is in a net unrealized investment gain position of $496.2 million at September 30, 2020.

Book Value Excluding Unrealized Investment Gains Up 5% Year Over Year

At September 30, 2020, shareholders' equity was $1.72 billion, or $41.45 per share. Excluding net unrealized investment gains on fixed maturity securities, shareholders' equity was $1.39 billion, or $33.52 per share.* The year-over-year improvement in book value excluding unrealized investment gains on fixed maturity securities primarily reflected the realized gain on assets transferred in the 2019 annuity reinsurance transaction, as well as strong earnings.

At September 30, 2020, total debt was $437.2 million, with $135.0 million outstanding on the company's line of credit. The ratio of debt-to-capital excluding net unrealized investment gains* was 24.0%.

Quarterly Webcast

Horace Mann's senior management will discuss the company's third quarter financial results with investors on November 3, 2020 at 9:00 a.m. Eastern Time. The conference call will be webcast live at investors.horacemann.com and archived later in the day for replay.

About Horace Mann

Horace Mann Educators Corporation (NYSE: HMN) is the largest financial services company focused on providing America's educators and school employees with insurance and retirement solutions. Founded by Educators for Educators(r) in 1945, the company is headquartered in Springfield, Illinois. For more information, visit horacemann.com.

Safe Harbor Statement and Non-GAAP Measures

Statements included in this news release that are not historical in nature are forward-looking within the meaning of the Private Securities Litigation Reform Act of 1995 and are subject to certain risks and uncertainties. Horace Mann is not under any obligation to (and expressly disclaims any such obligation to) update or revise any forward-looking statements, whether as a result of new information, future events or otherwise. Please refer to the company's Quarterly Report on Form 10-Q for the period ended June 30, 2020 and the company's past and future filings and reports filed with the Securities and Exchange Commission (SEC) for information concerning important factors that could cause actual results to differ materially from those in forward-looking statements. Information contained in this news release include measures which are based on methodologies other than accounting principles generally accepted in the United States of America (GAAP). Reconciliations of non-GAAP measures to the closest GAAP measures are contained in the Appendix to the Investor Supplement and additional descriptions of the non-GAAP measures are contained in the Glossary of Selected Terms included as an exhibit to the company's SEC filings.

N.M. - Not meaningful.

Total net investment income rose slightly year-over-year. Net investment income on the managed portfolio was comparable with last year as favorable returns on limited partnership investments offset slightly lower yields on fixed maturity investments.

Third-quarter pretax net investment gains were $2.5 million, including $1.1 million in other-than-temporary impairment charges. The company's fixed maturity securities portfolio is in a net unrealized investment gain position of $496.2 million at September 30, 2020.

Book Value Excluding Unrealized Investment Gains Up 5% Year Over Year

At September 30, 2020, shareholders' equity was $1.72 billion, or $41.45 per share. Excluding net unrealized investment gains on fixed maturity securities, shareholders' equity was $1.39 billion, or $33.52 per share.* The year-over-year improvement in book value excluding unrealized investment gains on fixed maturity securities primarily reflected the realized gain on assets transferred in the 2019 annuity reinsurance transaction, as well as strong earnings.

At September 30, 2020, total debt was $437.2 million, with $135.0 million outstanding on the company's line of credit. The ratio of debt-to-capital excluding net unrealized investment gains* was 24.0%.

Quarterly Webcast

Horace Mann's senior management will discuss the company's third quarter financial results with investors on November 3, 2020 at 9:00 a.m. Eastern Time. The conference call will be webcast live at investors.horacemann.com and archived later in the day for replay.

About Horace Mann

Horace Mann Educators Corporation (NYSE: HMN) is the largest financial services company focused on providing America's educators and school employees with insurance and retirement solutions. Founded by Educators for Educators(r) in 1945, the company is headquartered in Springfield, Illinois. For more information, visit horacemann.com.

Safe Harbor Statement and Non-GAAP Measures

Statements included in this news release that are not historical in nature are forward-looking within the meaning of the Private Securities Litigation Reform Act of 1995 and are subject to certain risks and uncertainties. Horace Mann is not under any obligation to (and expressly disclaims any such obligation to) update or revise any forward-looking statements, whether as a result of new information, future events or otherwise. Please refer to the company's Quarterly Report on Form 10-Q for the period ended June 30, 2020 and the company's past and future filings and reports filed with the Securities and Exchange Commission (SEC) for information concerning important factors that could cause actual results to differ materially from those in forward-looking statements. Information contained in this news release include measures which are based on methodologies other than accounting principles generally accepted in the United States of America (GAAP). Reconciliations of non-GAAP measures to the closest GAAP measures are contained in the Appendix to the Investor Supplement and additional descriptions of the non-GAAP measures are contained in the Glossary of Selected Terms included as an exhibit to the company's SEC filings.

HORACE MANN EDUCATORS CORPORATION

Financial Highlights (Unaudited)

($ in Millions, except per share data)

Three Months Ended Nine Months Ended September 30, September 30,

2020 2019 % 2020 2019 % Change Change

EARNINGS SUMMARY

Net income $ 36.5 $ 25.4 43.7 % $ 85.5 $ 151.4 -43.5 %

Netinvestmentgains 1.9 (1.6 ) N.M. (10.1 ) 118.9 N.M. (losses),after tax

Other expense- goodwill - - - - (28.0 ) N.M. impairment

Core 34.6 27.0 28.1 % 95.6 60.5 58.0 %earnings*



Per diluted share:

Net income $ 0.87 $ 0.60 45.0 % $ 2.03 $ 3.61 -43.8 %

Netinvestmentgains $ 0.05 $ (0.04 ) N.M. $ (0.24 ) $ 2.84 N.M. (losses),after tax

Other expense- goodwill $ - $ - - $ - $ (0.67 ) N.M. impairment

Core $ 0.82 $ 0.64 28.1 % $ 2.27 $ 1.44 57.6 %earnings*

Weightedaveragenumber ofshares and 42.1 42.0 0.2 % 42.0 41.9 0.2 %equivalentshares (inmillions) -Diluted



RETURN ON EQUITY

Net incomereturn on 7.4 % 9.2 % 7.4 % 9.2 % equity - LTM^(1)

Net incomereturn on 8.7 % 6.6 % 6.9 % 14.1 % equity -annualized

Core returnon equity - 9.4 % 4.1 % 9.4 % 4.1 % LTM* ^(2)

Core returnon equity - 10.1 % 8.3 % 9.4 % 6.4 % annualized*



FINANCIAL POSITION

Per share:^ (3)

Book value $ 41.45 $ 38.30 8.2 %

Effect of netunrealizedinvestmentgains on $ 7.93 $ 6.46 22.8 %fixedmaturitysecurities ^(4)

Dividends $ 0.30 $ 0.2875 4.3 % $ 0.90 $ 0.8625 4.3 %paid

Ending numberof sharesoutstanding 41.4 41.2 0.5 %(in millions)^(3)

Total assets $ 13,003.4 $ 12,332.5 5.4 %

Short-term 135.0 135.0 - %debt

Long-term 302.2 298.0 1.4 %debt

Totalshareholders' 1,715.7 1,578.6 8.7 %equity



ADDITIONAL INFORMATION

Netinvestment gains(losses)

Before tax $ 2.5 $ (2.1 ) N.M. $ (12.8 ) $ 151.6 N.M.

After tax 1.9 (1.6 ) N.M. (10.1 ) 118.9 N.M.

Per share, $ 0.05 $ (0.04 ) N.M. $ (0.24 ) $ 2.84 N.M. diluted

N.M. - Not meaningful.(1)

Based on last twelve months net income and average quarter-end shareholders' equity.

(2)

Based on last twelve months core earnings and average quarter-end shareholders' equity which has been adjusted to exclude the fair value adjustment for investments, net of the related impact on deferred policy acquisition costs and applicable deferred taxes.

(3)

Ending shares outstanding were 41,396,322 at September 30, 2020 and 41,213,085 at September 30, 2019.

(4)

Net of the related impact on deferred policy acquisition costs and applicable deferred taxes.

N.M. - Not meaningful.^ Based on last twelve months net income and average quarter-end(1) shareholders' equity.

Based on last twelve months core earnings and average quarter-end^ shareholders' equity which has been adjusted to exclude the fair value(2) adjustment for investments, net of the related impact on deferred policy acquisition costs and applicable deferred taxes.

^ Ending shares outstanding were 41,396,322 at September 30, 2020 and(3) 41,213,085 at September 30, 2019.

^ Net of the related impact on deferred policy acquisition costs and(4) applicable deferred taxes.

HORACE MANN EDUCATORS CORPORATION

Statements of Operations and Consolidated Data (Unaudited)

($ in Millions)

Three Months Ended September 30,

Nine Months Ended September 30,

2020

2019

% Change

2020

2019

% Change

STATEMENTS OF OPERATIONS

Insurance premiums and contract charges earned

$

235.3

$

239.7

-1.8

%

$

697.0

$

657.6

6.0

%

Net investment income

93.7

93.0

0.8

%

256.4

279.3

-8.2

%

Net investment gains (losses)

2.5

(2.1

)

N.M.

(12.8

)

151.6

N.M.

Other income

5.6

6.0

-6.7

%

17.5

16.9

3.6

%

Total revenues

337.1

336.6

0.1

%

958.1

1,105.4

-13.3

%

Benefits, claims and settlement expenses

151.4

154.2

-1.8

%

433.1

446.3

-3.0

%

Interest credited

51.1

53.6

-4.7

%

153.3

160.1

-4.2

%

Operating expenses

57.9

63.6

-9.0

%

173.1

175.9

-1.6

%

DAC unlocking and amortization expense

24.6

26.3

-6.5

%

75.0

82.9

-9.5

%

Intangible asset amortization expense

3.5

3.8

-7.9

%

10.9

4.9

122.4

%

Interest expense

3.5

4.6

-23.9

%

11.7

11.2

4.5

%

Other expense - goodwill impairment

-

-

-

-

28.0

N.M.

Total benefits, losses and expenses

292.0

306.1

-4.6

%

857.1

909.3

-5.7

%

Income before income taxes

45.1

30.5

47.9

%

101.0

196.1

-48.5

%

Income tax expense

8.6

5.1

68.6

%

15.5

44.7

-65.3

%

Net income

$

36.5

$

25.4

43.7

%

$

85.5

$

151.4

-43.5

%

PREMIUMS WRITTEN AND CONTRACT DEPOSITS*

Property and Casualty

$

172.8

$

182.5

-5.3

%

$

482.5

$

518.5

-6.9

%

Supplemental (2)

32.0

32.7

-2.1

%

98.3

32.7

N/A

Annuity contract deposits

137.2

128.3

6.9

%

366.7

344.6

6.4

%

Life

26.9

27.7

-2.9

%

79.3

82.5

-3.9

%

Total

$

368.9

$

371.2

-0.6

%

$

1,026.8

$

978.3

5.0

%

SEGMENT NET INCOME (LOSS)

Property and Casualty

$

15.8

$

14.2

11.3

%

$

53.7

$

34.3

56.6

%

Supplemental (2)

10.6

6.9

53.6

%

30.6

6.9

N/A

Retirement

7.8

5.9

32.2

%

16.6

(6.9

)

340.6

%

Life

4.3

5.1

-15.7

%

6.8

13.6

-50.0

%

Corporate and Other (1)

(2.0

)

(6.7

)

70.1

%

(22.2

)

103.5

-121.4

%

Net income

$

36.5

$

25.4

43.7

%

$

85.5

$

151.4

-43.5

%

HORACE MANN EDUCATORS CORPORATION

Statements of Operations and Consolidated Data (Unaudited)

($ in Millions)

Three Months Ended Nine Months Ended September 30, September 30,

2020 2019 % 2020 2019 % Change Change

STATEMENTSOF OPERATIONS

Insurancepremiums andcontract $ 235.3 $ 239.7 -1.8 % $ 697.0 $ 657.6 6.0 %chargesearned

Netinvestment 93.7 93.0 0.8 % 256.4 279.3 -8.2 %income

Netinvestment 2.5 (2.1 ) N.M. (12.8 ) 151.6 N.M.gains(losses)

Other income 5.6 6.0 -6.7 % 17.5 16.9 3.6 %

Total 337.1 336.6 0.1 % 958.1 1,105.4 -13.3 %revenues



Benefits,claims and 151.4 154.2 -1.8 % 433.1 446.3 -3.0 %settlementexpenses

Interest 51.1 53.6 -4.7 % 153.3 160.1 -4.2 %credited

Operating 57.9 63.6 -9.0 % 173.1 175.9 -1.6 %expenses

DACunlockingand 24.6 26.3 -6.5 % 75.0 82.9 -9.5 %amortizationexpense

Intangibleasset 3.5 3.8 -7.9 % 10.9 4.9 122.4 %amortizationexpense

Interest 3.5 4.6 -23.9 % 11.7 11.2 4.5 %expense

Otherexpense - - - - - 28.0 N.M. goodwillimpairment

Totalbenefits, 292.0 306.1 -4.6 % 857.1 909.3 -5.7 %losses andexpenses



Incomebefore 45.1 30.5 47.9 % 101.0 196.1 -48.5 %income taxes

Income tax 8.6 5.1 68.6 % 15.5 44.7 -65.3 %expense

Net income $ 36.5 $ 25.4 43.7 % $ 85.5 $ 151.4 -43.5 %



PREMIUMS WRITTEN AND CONTRACT DEPOSITS*

Property and $ 172.8 $ 182.5 -5.3 % $ 482.5 $ 518.5 -6.9 %Casualty

Supplemental 32.0 32.7 -2.1 % 98.3 32.7 N/A ^(2)

Annuitycontract 137.2 128.3 6.9 % 366.7 344.6 6.4 %deposits

Life 26.9 27.7 -2.9 % 79.3 82.5 -3.9 %

Total $ 368.9 $ 371.2 -0.6 % $ 1,026.8 $ 978.3 5.0 %



SEGMENT NETINCOME (LOSS)

Property and $ 15.8 $ 14.2 11.3 % $ 53.7 $ 34.3 56.6 %Casualty

Supplemental 10.6 6.9 53.6 % 30.6 6.9 N/A ^(2)

Retirement 7.8 5.9 32.2 % 16.6 (6.9 ) 340.6 %

Life 4.3 5.1 -15.7 % 6.8 13.6 -50.0 %

Corporateand Other ^ (2.0 ) (6.7 ) 70.1 % (22.2 ) 103.5 -121.4 %(1)

Net income $ 36.5 $ 25.4 43.7 % $ 85.5 $ 151.4 -43.5 %

N.M. - Not meaningful.(1)

Corporate and Other includes interest expense on debt and the impact of net investment gains and losses and other Corporate level items. The Company does not allocate the impact of corporate level transactions to the insurance segments consistent with how management evaluates the results of those segments. See detail for this segment on page 12.

(2)

Acquired on July 1, 2019. Nine month comparison is not applicable.

N.M. - Not meaningful. Corporate and Other includes interest expense on debt and the impact of^ net investment gains and losses and other Corporate level items. The(1) Company does not allocate the impact of corporate level transactions to the insurance segments consistent with how management evaluates the results of those segments. See detail for this segment on page 12.

^ Acquired on July 1, 2019. Nine month comparison is not applicable.(2)

HORACE MANN EDUCATORS CORPORATION

Business Segment Overview (Unaudited)

($ in Millions)

Three Months Ended September 30,

Nine Months Ended September 30,

2020

2019

Change

2020

2019

Change

PROPERTY and CASUALTY

Written premiums*

$

172.8

$

182.5

-5.3

%

$

482.5

$

518.5

-6.9

%

Premiums earned

166.0

170.5

-2.6

%

488.7

512.6

-4.7

%

Net investment income

13.7

10.7

28.0

%

30.3

33.6

-9.8

%

Other income

0.5

0.5

-

%

2.1

1.7

23.5

%

Losses and loss adjustment expenses (LAE)

118.4

119.0

-0.5

%

331.0

368.2

-10.1

%

Operating expenses (includes amortization expense)

41.9

45.0

-6.9

%

126.0

136.9

-8.0

%

Interest expense

0.1

0.3

-66.7

%

0.4

1.0

-60.0

%

Income before income taxes

19.8

17.4

13.8

%

63.7

41.8

52.4

%

Net income / core earnings*

15.8

14.2

11.3

%

53.7

34.3

56.6

%

Net investment income, after tax

11.3

9.0

25.6

%

25.5

28.4

-10.2

%

Catastrophe losses

After tax

27.5

11.6

137.1

%

61.9

37.6

64.6

%

Before tax

34.8

14.7

136.7

%

78.3

47.6

64.5

%

Prior years' reserves favorable development, before tax

Automobile

1.0

3.5

-71.4

%

2.0

5.5

-63.6

%

Property and other

6.2

-

N.M.

7.2

2.0

N.M.

Total

7.2

3.5

105.7

%

9.2

7.5

22.7

%

Operating statistics:

Loss and loss adjustment expense ratio

71.3

%

69.8

%

1.5

pts

67.7

%

71.8

%

-4.1

pts

Expense ratio

25.2

%

26.4

%

-1.2

pts

25.8

%

26.7

%

-0.9

pts

Combined ratio

96.5

%

96.2

%

0.3

pts

93.5

%

98.5

%

-5.0

pts

Effect on the combined ratio of:

Catastrophe losses

20.9

%

8.6

%

12.3

pts

16.0

%

9.3

%

6.7

pts

Prior years' (favorable) reserve development

-4.3

%

-2.1

%

-2.2

pts

-1.9

%

-1.5

%

-0.4

pts

Combined ratio excluding the effects of catastrophe losses and prior years' reserve development (underlying combined ratio)*

79.9

%

89.7

%

-9.8

pts

79.4

%

90.7

%

-11.3

pts

Risks in force (in thousands)

593

637

-6.9

%

Automobile (1)

406

441

-7.9

%

Property

187

196

-4.6

%

Policy renewal rate - 12 months

Automobile

80.9

%

80.9

%

-

pts

Property

86.7

%

87.3

%

-0.6

pts

HORACE MANN EDUCATORS CORPORATION

Business Segment Overview (Unaudited)

($ in Millions)

Three Months Ended Nine Months Ended September 30, September 30,

2020 2019 Change 2020 2019 Change

PROPERTY and CASUALTY

Written $ 172.8 $ 182.5 -5.3 % $ 482.5 $ 518.5 -6.9 %premiums*

Premiums 166.0 170.5 -2.6 % 488.7 512.6 -4.7 %earned

Netinvestment 13.7 10.7 28.0 % 30.3 33.6 -9.8 %income

Other income 0.5 0.5 - % 2.1 1.7 23.5 %

Losses andlossadjustment 118.4 119.0 -0.5 % 331.0 368.2 -10.1 %expenses(LAE)

Operatingexpenses(includes 41.9 45.0 -6.9 % 126.0 136.9 -8.0 %amortizationexpense)

Interest 0.1 0.3 -66.7 % 0.4 1.0 -60.0 %expense

Incomebefore 19.8 17.4 13.8 % 63.7 41.8 52.4 %income taxes

Net income /core 15.8 14.2 11.3 % 53.7 34.3 56.6 %earnings*

Netinvestment 11.3 9.0 25.6 % 25.5 28.4 -10.2 %income,after tax



Catastrophe losses

After tax 27.5 11.6 137.1 % 61.9 37.6 64.6 %

Before tax 34.8 14.7 136.7 % 78.3 47.6 64.5 %

Prior years'reservesfavorable development,before tax

Automobile 1.0 3.5 -71.4 % 2.0 5.5 -63.6 %

Property and 6.2 - N.M. 7.2 2.0 N.M. other

Total 7.2 3.5 105.7 % 9.2 7.5 22.7 %



Operating statistics:

Loss andlossadjustment 71.3 % 69.8 % 1.5 pts 67.7 % 71.8 % -4.1 ptsexpenseratio

Expense 25.2 % 26.4 % -1.2 pts 25.8 % 26.7 % -0.9 ptsratio

Combined 96.5 % 96.2 % 0.3 pts 93.5 % 98.5 % -5.0 ptsratio

Effect onthe combined ratio of:

Catastrophe 20.9 % 8.6 % 12.3 pts 16.0 % 9.3 % 6.7 ptslosses

Prior years'(favorable) -4.3 % -2.1 % -2.2 pts -1.9 % -1.5 % -0.4 ptsreservedevelopment

Combinedratioexcludingthe effectsofcatastrophelosses and 79.9 % 89.7 % -9.8 pts 79.4 % 90.7 % -11.3 ptsprior years'reservedevelopment(underlyingcombinedratio)*



Risks inforce (in 593 637 -6.9 %thousands)

Automobile ^ 406 441 -7.9 %(1)

Property 187 196 -4.6 %



Policyrenewal rate - 12 months

Automobile 80.9 % 80.9 % - pts

Property 86.7 % 87.3 % -0.6 pts

N.M. - Not meaningful.(1)

Includes assumed risks in force of 4.

N.M. - Not meaningful.^(1) Includes assumed risks in force of 4.

HORACE MANN EDUCATORS CORPORATION

Business Segment Overview (Unaudited)

($ in Millions)

Three Months Ended September 30,

Nine Months Ended September 30,

2020

2019

Change

2020

2019

Change

SUPPLEMENTAL

Premiums and contract charges earned

$

32.5

$

32.9

-1.2

%

$

98.8

$

32.9

N/A

Net investment income

4.3

3.7

16.2

%

11.8

3.7

N/A

Other income

0.7

0.6

16.7

%

2.0

0.6

N/A

Benefits

9.2

11.1

-17.1

%

28.6

11.1

N/A

Change in reserves

1.3

3.6

-63.9

%

4.9

3.6

N/A

Interest credited

0.2

-

N.M.

0.2

-

N/A

Operating expenses (includes DAC unlocking and amortization expense)

10.1

10.5

-3.8

%

30.3

10.5

N/A

Intangible asset amortization expense

3.1

3.2

-

%

9.5

3.2

N/A

Income before income taxes

13.6

8.8

54.5

%

39.1

8.8

N/A

Net income / core earnings*

10.6

6.9

53.6

%

30.6

6.9

N/A

Benefits ratio (1)

32.3

%

44.7

%

-12.4

pts

33.9

%

44.7

%

N/A

Operating expense ratio (2)

26.9

%

28.2

%

-1.3

pts

26.9

%

28.2

%

N/A

Pretax profit margin (3)

36.3

%

23.7

%

12.6

pts

34.7

%

23.7

%

N/A

Premium persistency (rolling 12 months)

90.1

%

88.9

%

1.2

pts

90.1

%

88.9

%

N/A

HORACE MANN EDUCATORS CORPORATION

Business Segment Overview (Unaudited)

($ in Millions)

Three Months Ended Nine Months Ended September 30, September 30,

2020 2019 Change 2020 2019 Change

SUPPLEMENTAL

Premiums andcontract $ 32.5 $ 32.9 -1.2 % $ 98.8 $ 32.9 N/Acharges earned

Net investment 4.3 3.7 16.2 % 11.8 3.7 N/Aincome

Other income 0.7 0.6 16.7 % 2.0 0.6 N/A

Benefits 9.2 11.1 -17.1 % 28.6 11.1 N/A

Change in 1.3 3.6 -63.9 % 4.9 3.6 N/Areserves

Interest 0.2 - N.M. 0.2 - N/Acredited

Operatingexpenses(includes DAC 10.1 10.5 -3.8 % 30.3 10.5 N/Aunlocking andamortizationexpense)

Intangibleasset 3.1 3.2 - % 9.5 3.2 N/Aamortizationexpense

Income before 13.6 8.8 54.5 % 39.1 8.8 N/Aincome taxes

Net income / 10.6 6.9 53.6 % 30.6 6.9 N/Acore earnings*



Benefits ratio 32.3 % 44.7 % -12.4 pts 33.9 % 44.7 % N/A^(1)

Operatingexpense ratio 26.9 % 28.2 % -1.3 pts 26.9 % 28.2 % N/A^(2)

Pretax profit 36.3 % 23.7 % 12.6 pts 34.7 % 23.7 % N/Amargin ^(3)



Premiumpersistency 90.1 % 88.9 % 1.2 pts 90.1 % 88.9 % N/A(rolling 12months)

N.M. - Not meaningful.N/A - The acquisition of NTA closed on July 1, 2019.(1)

Ratio of benefits plus change in reserves to earned premium.

(2)

Ratio of operating expenses to total revenues.

(3)

Ratio of income before taxes to total revenues.

N.M. - Not meaningful.N/A - The acquisition of NTA closed on July 1, 2019.^(1) Ratio of benefits plus change in reserves to earned premium.

^(2) Ratio of operating expenses to total revenues.

^(3) Ratio of income before taxes to total revenues.

HORACE MANN EDUCATORS CORPORATION

Business Segment Overview (Unaudited)

($ in Millions)

Three Months Ended September 30,

Nine Months Ended September 30,

2020

2019

Change

2020

2019

Change

RETIREMENT

Contract deposits*

$

137.2

$

128.3

6.9

%

$

366.7

$

344.6

6.4

%

Variable

58.5

54.6

7.1

%

168.6

157.5

7.0

%

Fixed

78.7

73.7

6.8

%

198.1

187.1

5.9

%

Contract charges earned

7.4

6.6

12.1

%

21.5

22.1

-2.7

%

Net investment income

33.6

37.0

-9.2

%

94.6

141.2

-33.0

%

Interest credited

14.2

17.5

-18.9

%

44.4

77.2

-42.5

%

Net interest margin

19.4

19.5

-0.5

%

50.2

64.0

-21.6

%

Investment income - deposit asset on reinsurance

24.5

23.8

2.9

%

72.1

47.0

53.4

%

Interest credited - Reinsured block

25.5

24.9

2.4

%

75.0

49.2

52.4

%

Net interest margin - Reinsured block

(1.0

)

(1.1

)

9.1

%

(2.9

)

(2.2

)

-31.8

%

Other income

3.9

4.5

-13.3

%

12.1

13.4

-9.7

%

Mortality loss and other reserve changes

(1.3

)

(0.9

)

-44.4

%

(4.1

)

(2.7

)

-51.9

%

Operating expenses (includes DAC unlocking and amortization expense)

19.1

21.0

-9.0

%

56.4

68.1

-17.2

%

Intangible asset amortization expense

0.4

0.6

-33.3

%

1.4

1.7

-17.6

%

Other expense - goodwill impairment

-

-

-

-

28.0

N.M.

Income (loss) before income taxes

8.9

7.0

27.1

%

19.0

(3.2

)

N.M.

Net income (loss)

7.8

5.9

32.2

%

16.6

(6.9

)

N.M.

Core earnings

7.8

5.9

32.2

%

16.6

21.1

-21.3

%

Pretax income increase (decrease) due to evaluation of:

Deferred policy acquisition costs

$

0.7

$

-

N.M.

$

1.3

$

(3.6

)

N.M.

Guaranteed minimum death benefit reserve

0.1

-

N.M.

-

0.1

N.M.

Retirement contracts in force (in thousands)

230

227

1.3

%

Annuity accumulated account value on deposit / Assets under management

$

4,508.7

$

4,215.9

6.9

%

Variable (1)

1,828.4

1,635.0

11.8

%

Fixed

2,680.3

2,580.9

3.9

%

Annuity accumulated value retention - 12 months

Variable accumulations

94.8

%

94.7

%

0.1

pts

Fixed accumulations

94.5

%

93.9

%

0.6

pts

LIFE

Premiums and contract deposits*

$

26.9

$

27.7

-2.9

%

$

79.3

$

82.5

-3.9

%

Premiums and contract charges earned

29.4

29.7

-1.0

%

88.0

90.0

-2.2

%

Net investment income

18.2

18.4

-1.1

%

49.4

54.8

-9.9

%

Other income

0.1

-

N.M.

0.1

0.2

-50.0

%

Death benefits/mortality cost/change in reserves

21.2

19.6

8.2

%

64.5

60.7

6.3

%

Interest credited

11.2

11.2

-

%

33.7

33.7

-

%

Operating expenses (includes DAC unlocking and amortization expense)

10.1

10.9

-7.3

%

31.1

33.5

-7.2

%

Income before income taxes

5.2

6.4

-18.8

%

8.2

17.1

-52.0

%

Net income / core earnings*

4.3

5.1

-15.7

%

6.8

13.6

-50.0

%

Pretax income increase (decrease) due to evaluation of:

Deferred policy acquisition costs

$

0.2

$

-

N.M.

$

0.5

$

0.1

N.M.

Life policies in force (in thousands)

201

202

-0.5

%

Life insurance in force

$

19,681

$

18,937

3.9

%

Lapse ratio - 12 months (Ordinary life insurance)

4.3

%

4.5

%

-0.2

pts

HORACE MANN EDUCATORS CORPORATION

Business Segment Overview (Unaudited)

($ in Millions)

Three Months Ended Nine Months Ended September 30, September 30,

2020 2019 Change 2020 2019 Change

RETIREMENT

Contract $ 137.2 $ 128.3 6.9 % $ 366.7 $ 344.6 6.4 %deposits*

Variable 58.5 54.6 7.1 % 168.6 157.5 7.0 %

Fixed 78.7 73.7 6.8 % 198.1 187.1 5.9 %

Contractcharges 7.4 6.6 12.1 % 21.5 22.1 -2.7 %earned

Netinvestment 33.6 37.0 -9.2 % 94.6 141.2 -33.0 %income

Interest 14.2 17.5 -18.9 % 44.4 77.2 -42.5 %credited

Net interest 19.4 19.5 -0.5 % 50.2 64.0 -21.6 %margin

Investmentincome -deposit asset 24.5 23.8 2.9 % 72.1 47.0 53.4 %onreinsurance

Interestcredited - 25.5 24.9 2.4 % 75.0 49.2 52.4 %Reinsuredblock

Net interestmargin - (1.0 ) (1.1 ) 9.1 % (2.9 ) (2.2 ) -31.8 %Reinsuredblock

Other income 3.9 4.5 -13.3 % 12.1 13.4 -9.7 %

Mortalityloss and (1.3 ) (0.9 ) -44.4 % (4.1 ) (2.7 ) -51.9 %other reservechanges

Operatingexpenses(includes DAC 19.1 21.0 -9.0 % 56.4 68.1 -17.2 %unlocking andamortizationexpense)

Intangibleasset 0.4 0.6 -33.3 % 1.4 1.7 -17.6 %amortizationexpense

Other expense- goodwill - - - - 28.0 N.M. impairment

Income (loss)before income 8.9 7.0 27.1 % 19.0 (3.2 ) N.M. taxes

Net income 7.8 5.9 32.2 % 16.6 (6.9 ) N.M. (loss)

Core earnings 7.8 5.9 32.2 % 16.6 21.1 -21.3 %



Pretax incomeincrease(decrease) due toevaluationof:

Deferredpolicy $ 0.7 $ - N.M. $ 1.3 $ (3.6 ) N.M. acquisitioncosts

Guaranteedminimum death 0.1 - N.M. - 0.1 N.M. benefitreserve

Retirementcontracts in 230 227 1.3 %force (inthousands)

Annuityaccumulatedaccount value $ 4,508.7 $ 4,215.9 6.9 %on deposit /Assets undermanagement

Variable ^(1) 1,828.4 1,635.0 11.8 %

Fixed 2,680.3 2,580.9 3.9 %

Annuityaccumulatedvalue retention -12 months

Variable 94.8 % 94.7 % 0.1 ptsaccumulations

Fixed 94.5 % 93.9 % 0.6 ptsaccumulations



LIFE

Premiums andcontract $ 26.9 $ 27.7 -2.9 % $ 79.3 $ 82.5 -3.9 %deposits*

Premiums andcontract 29.4 29.7 -1.0 % 88.0 90.0 -2.2 %chargesearned

Netinvestment 18.2 18.4 -1.1 % 49.4 54.8 -9.9 %income

Other income 0.1 - N.M. 0.1 0.2 -50.0 %

Deathbenefits/mortality 21.2 19.6 8.2 % 64.5 60.7 6.3 %cost/changein reserves

Interest 11.2 11.2 - % 33.7 33.7 - %credited

Operatingexpenses(includes DAC 10.1 10.9 -7.3 % 31.1 33.5 -7.2 %unlocking andamortizationexpense)

Income before 5.2 6.4 -18.8 % 8.2 17.1 -52.0 %income taxes

Net income /core 4.3 5.1 -15.7 % 6.8 13.6 -50.0 %earnings*

Pretax incomeincrease(decrease) due toevaluationof:

Deferredpolicy $ 0.2 $ - N.M. $ 0.5 $ 0.1 N.M. acquisitioncosts

Life policiesin force (in 201 202 -0.5 %thousands)

Lifeinsurance in $ 19,681 $ 18,937 3.9 %force

Lapse ratio -12 months(Ordinary 4.3 % 4.5 % -0.2 ptslifeinsurance)

N.M. - Not meaningful.(1)

Amount reported as of September 30, 2020 excludes $660.1 of assets under management held under modified coinsurance reinsurance.

N.M. - Not meaningful.^ Amount reported as of September 30, 2020 excludes $660.1 of assets under(1) management held under modified coinsurance reinsurance.

HORACE MANN EDUCATORS CORPORATION

Business Segment Overview (Unaudited)

($ in Millions)

Three Months Ended September 30,

Nine Months Ended September 30,

2020

2019

Change

2020

2019

% Change

CORPORATE AND OTHER (1)

Components of income (loss) before tax:

Net investment gains (losses)

$

2.5

$

(2.1

)

N.M.

$

(12.8

)

$

151.6

N.M.

Interest expense

(3.4

)

(4.3

)

20.9

%

(11.3

)

(10.2

)

-10.8

%

Other operating expenses, net investment income and other income

(1.5

)

(2.7

)

44.4

%

(4.9

)

(9.8

)

50.0

%

Income (loss) before income taxes

(2.4

)

(9.1

)

73.6

%

(29.0

)

131.6

122.0

%

Net income (loss)

(2.0

)

(6.7

)

70.1

%

(22.2

)

103.5

121.4

%

INVESTMENTS

Retirement and Life

Fixed maturity securities, at fair value (amortized cost 2020, $4,326.6; 2019, $4,113.4)

$

4,719.0

$

4,432.7

6.5

%

Equity securities, at fair value

68.9

76.2

-9.6

%

Short-term investments

219.1

180.7

21.3

%

Policy loans

150.6

153.1

-1.6

%

Limited partnerships

263.8

281.1

-6.2

%

Other investments

44.4

35.0

26.9

%

Total Retirement and Life investments

5,465.8

5,158.8

6.0

%

Property and Casualty

Fixed maturity securities, at fair value (amortized cost 2020, $804.1; 2019, $879.1)

873.1

934.6

-6.6

%

Equity securities, at fair value

29.1

29.3

-0.7

%

Short-term investments

21.1

10.0

111.0

%

Limited partnerships

118.6

65.7

80.5

%

Other investments

1.1

1.0

10.0

%

Total Property and Casualty investments

1,043.0

1,040.6

0.2

%

Supplemental

Fixed maturity securities, at fair value (amortized cost 2020, $541.6; 2019, $461.0)

576.5

472.2

22.1

%

Equity securities, at fair value

4.3

-

N.M.

Short-term investments

13.8

46.7

-70.4

%

Policy loans

0.8

0.8

-

%

Limited partnerships

35.8

7.8

N.M.

Other investments

1.8

5.7

-68.4

%

Total Supplemental investments

633.0

533.2

18.7

%

Corporate investments

0.3

0.4

-25.0

%

Total investments

$

7,142.1

$

6,733.0

6.1

%

Net investment income - investment portfolio

Before tax

$

69.2

$

69.2

-

%

$

184.3

$

232.3

-20.7

%

After tax

55.1

55.3

-0.4

%

147.1

185.5

-20.7

%

Investment income - deposit asset on reinsurance

Before tax

$

24.5

23.8

2.9

%

$

72.1

47.0

N.M.

After tax

19.4

18.8

3.2

%

57.0

37.1

N.M.

HORACE MANN EDUCATORS CORPORATION

Business Segment Overview (Unaudited)

($ in Millions)

Three Months Ended Nine Months Ended September 30, September 30,

2020 2019 Change 2020 2019 % Change

CORPORATEAND OTHER ^ (1)

Componentsof income (loss)before tax:

Netinvestment $ 2.5 $ (2.1 ) N.M. $ (12.8 ) $ 151.6 N.M. gains(losses)

Interest (3.4 ) (4.3 ) 20.9 % (11.3 ) (10.2 ) -10.8 %expense

Otheroperatingexpenses,net (1.5 ) (2.7 ) 44.4 % (4.9 ) (9.8 ) 50.0 %investmentincome andother income

Income(loss) (2.4 ) (9.1 ) 73.6 % (29.0 ) 131.6 122.0 %beforeincome taxes

Net income (2.0 ) (6.7 ) 70.1 % (22.2 ) 103.5 121.4 %(loss)



INVESTMENTS

Retirement and Life

Fixedmaturitysecurities,at fairvalue $ 4,719.0 $ 4,432.7 6.5 %(amortizedcost 2020,$4,326.6;2019,$4,113.4)

Equitysecurities, 68.9 76.2 -9.6 %at fairvalue

Short-term 219.1 180.7 21.3 %investments

Policy loans 150.6 153.1 -1.6 %

Limited 263.8 281.1 -6.2 %partnerships

Other 44.4 35.0 26.9 %investments

TotalRetirement 5,465.8 5,158.8 6.0 %and Lifeinvestments

Property and Casualty

Fixedmaturitysecurities,at fairvalue 873.1 934.6 -6.6 %(amortizedcost 2020,$804.1;2019,$879.1)

Equitysecurities, 29.1 29.3 -0.7 %at fairvalue

Short-term 21.1 10.0 111.0 %investments

Limited 118.6 65.7 80.5 %partnerships

Other 1.1 1.0 10.0 %investments

TotalProperty and 1,043.0 1,040.6 0.2 %Casualtyinvestments

Supplemental

Fixedmaturitysecurities,at fairvalue 576.5 472.2 22.1 %(amortizedcost 2020,$541.6;2019,$461.0)

Equitysecurities, 4.3 - N.M. at fairvalue

Short-term 13.8 46.7 -70.4 %investments

Policy loans 0.8 0.8 - %

Limited 35.8 7.8 N.M. partnerships

Other 1.8 5.7 -68.4 %investments

TotalSupplemental 633.0 533.2 18.7 %investments

Corporate 0.3 0.4 -25.0 %investments

Total $ 7,142.1 $ 6,733.0 6.1 %investments



Netinvestmentincome - investmentportfolio

Before tax $ 69.2 $ 69.2 - % $ 184.3 $ 232.3 -20.7 %

After tax 55.1 55.3 -0.4 % 147.1 185.5 -20.7 %

Investmentincome -deposit asset onreinsurance

Before tax $ 24.5 23.8 2.9 % $ 72.1 47.0 N.M.

After tax 19.4 18.8 3.2 % 57.0 37.1 N.M.

N.M. - Not meaningful.

(1)

The Corporate and Other segment includes interest expense on debt and the impact of investment gains and losses and other corporate level items. The Company does not allocate the impact of corporate level transactions to the insurance segments consistent with how management evaluates the results of those segments.

View source version on businesswire.com: https://www.businesswire.com/news/home/20201102005993/en/

CONTACT: Heather J. Wietzel Vice President, Investor Relations 217-788-5144 investorrelations@horacemann.com