Business Wire | Aug 6, 2020 04:16PM EDT

Horace Mann Reports Second-Quarter 2020 Net Income of $0.73 Per Share and Core Earnings* of $0.67 Per Share

Aug. 06, 2020

SPRINGFIELD, Ill.--(BUSINESS WIRE)--Aug. 06, 2020--Horace Mann Educators Corporation (NYSE:HMN) today reported financial results for the quarter ended June 30, 2020:

Horace Mann Consolidated Financial Highlights

Three Months Ended June 30, Six Months Ended June 30,

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

Total $ 314.9 $ 454.1 -30.7 % $ 622.2 $ 770.0 -19.2 %revenues

Net income 30.5 93.8 -67.5 % 49.0 126.0 -61.1 %

Netinvestmentgains 2.5 114.7 N.M. (12.0 ) 120.5 N.M. (losses)after tax

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

Core 28.0 7.1 294.4 % 61.0 33.5 82.1 %earnings*

Per diluted share:

Net income 0.73 2.24 -67.4 % 1.17 3.01 -61.1 %

Netinvestmentgains 0.06 2.74 N.M. (0.28 ) 2.88 N.M. (losses)after tax

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

Coreearnings 0.67 0.17 294.1 % 1.45 0.80 81.3 %per dilutedshare*

Book value 39.69 36.41 9.0 %per share

Book valueper shareexcludingnetunrealized 32.93 31.48 4.6 %investmentgains onfixedmaturitysecurities*

N.M. - Not meaningful. * These measures are not based on accounting principles generally accepted in the United States (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.

"The COVID-19 pandemic has changed how we live, work and learn," said President and CEO Marita Zuraitis. "In this very different environment, Horace Mann is still guided by the same mission: To help educators achieve lifelong financial success. Given the immense challenges educators are facing during this time, we believe they deserve to have someone looking out for them now more than ever. I'm especially proud of the way our employees and agents have taken this commitment to heart during these challenging times.

"Despite these unusual times, Horace Mann continues to take care of our educator customers while remaining focused on the path to long-term growth in market share and achieving a double-digit return on equity," Zuraitis continued. "We continue to see the benefits of our comprehensive transformational strategic plan. For example, this quarter, our new Supplemental segment added $9.5 million to core earnings. Our Retirement segment continues to benefit from our annuity reinsurance transaction, which significantly mitigated interest rate risk.

"And through the second quarter, we continued measures to support educators, including auto premium credits to reflect driving levels that remained lower than normal. Further, and despite the additional challenges presented by the pandemic, our employees and agents moved quickly and compassionately to take care of customers in the South and Midwest affected by multiple tornadoes and severe storms that resulted in $34.7 million in catastrophe losses.

"As the effects of COVID-19 continue to ripple through the markets, work environments, and schools, we are seeing a short-term impact on new sales and, therefore, the time frame to achieve some longer-term objectives may be extended. But we know that, especially in challenging times, educators appreciate the value of protection and preparation, and we are uniquely well-positioned to help them protect what they have today and prepare for a successful tomorrow.

"Our full-year 2020 core EPS guidance range is now $2.80 to $3.00, with core ROE expected to be about 9%. The revised guidance takes into account the favorable results for the first half of the year. In addition, we are increasing our full-year catastrophe loss assumption and will record subrogation benefits in the third quarter as a result of PG&E's successful emergence from bankruptcy." Zuraitis concluded. "For 75 years, Horace Mann has been successful because we have stayed true to our mission of serving educators. Guided by this mission and supported by our strong financial position, we will continue to work toward our long-term objectives and focus on supporting our educator customers."

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 expects to recognize favorable prior year reserve development of approximately $4.8 million, pretax and net of reinsurance, along with the return of reinsurance reinstatement premiums of approximately $3.5 million, for a total of $8.3 million, related to the 2018 Camp Fire in California. The Camp Fire generated gross losses of $150.0 million, and, net losses after reinsurance of $37.9 million pretax, in 2018.

Property and Casualty Segment Second-Quarter Combined Ratio at 95.4%

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

Three Months Ended June 30, Six Months Ended June 30,

($ in 2020 2019 Change 2020 2019 Changemillions)



PropertyandCasualty $ 156.1 $ 174.3 -10.4 % $ 309.7 $ 336.0 -7.8 %writtenpremiums*

PropertyandCasualty 11.3 5.1 121.6 % 37.9 20.1 88.6 %net income/ coreearnings*

PropertyandCasualty 95.4 % 103.8 % -8.4 pts 92.0 % 99.7 % -7.7 ptscombinedratio

PropertyandCasualty 47.6 % 65.6 % -18.0 pts 53.0 % 64.4 % -11.4 ptsunderlyingloss ratio*

PropertyandCasualty 26.2 % 26.5 % -0.3 pts 26.1 % 26.9 % -0.8 ptsexpenseratio

PropertyandCasualty 22.2 % 12.9 % 9.3 pts 13.5 % 9.6 % 3.9 ptscatastrophecosts

PropertyandCasualty 73.8 % 92.1 % -18.3 pts 79.1 % 91.3 % -12.2 ptsunderlyingcombinedratio*

Autocombined 80.3 % 100.4 % -20.1 pts 86.3 % 99.2 % -12.9 ptsratio

Autounderlying 50.1 % 72.8 % -22.7 pts 58.8 % 71.9 % -13.1 ptsloss ratio*

Propertycombined 123.9 % 111.4 % 12.5 pts 103.3 % 101.0 % 2.3 ptsratio

Propertyunderlying 43.0 % 49.8 % -6.8 pts 41.9 % 48.2 % -6.3 ptsloss ratio*

Property and Casualty written premiums declined in part because premiums were reduced by $9.8 million for COVID-19 related credits equal to 15% of two months of automobile premiums. In addition, written premiums reflected lower new business and a lower level of rate increases being implemented in 2020. Auto and property policy retention rates for the quarter were 81.6% and 87.5%, respectively, remaining in line with recent experience.

Segment core earnings rose substantially, primarily due to an 8.4 points improvement in the combined ratio driven by the unusually low underlying loss ratios. The auto loss ratio reflected lower frequency related to reduced driving activity due to COVID-19 as well as the ongoing benefit of profitability initiatives. The property loss ratio reflected lower non-catastrophe-related weather losses.

Offsetting the improved underlying loss ratio were $34.7 million of catastrophe losses from 20 events that added 22 points to the combined ratio. The largest losses were a multi-state, mid-April wind and thunderstorm event in multiple states across the Midwest, South and East Coast; and an early May wind and thunderstorm event that traveled from Kansas to South Carolina.

The catastrophe losses in this year's second quarter were about 70% of the company's original full-year guidance. Historically, Horace Mann's second-quarter catastrophe losses have been approximately 50% of full-year catastrophe losses. As a result, the company's guidance now assumes full-year 2020 catastrophe losses between $60 and $70 million, or as much as 10 points on the combined ratio.

Supplemental Segment Contributes $9.5 Million to Second-Quarter Earnings

On July 1, 2019, Horace Mann acquired NTA Life Enterprises, LLC (NTA), which became the company's new Supplemental segment. As a part of Horace Mann, it continues to provide supplemental insurance products to the education market, building on 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 June Six Months Ended June 30, 30,

($ in millions) 2020 2019 Change 2020 2019 Change



Supplemental sales* $ 0.7 N/A N/A $ 4.4 N/A N/A

Earned premiums 33.3 N/A N/A 66.3 N/A N/A

Supplemental net income / 9.5 N/A N/A 20.0 N/A N/Acore earnings*

Pretax profit margin ^(1) 31.9 % N/A N/A 34.0 % N/A N/A

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

Supplemental segment sales were $0.7 million for the quarter, reflecting significantly lower sales volume due to school closings in the spring because of COVID-19. Persistency remained steady at 89.3%.

The segment added $9.5 million to core earnings, with the pretax profit margin moving closer to management's longer-term expectations. Second-quarter results reflected continued favorable trends in the acquired business and 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 $3.2 million pretax.

Retirement Segment Sees 2.6% Increase in Annuity Contract Deposits

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

Three Months Ended June 30, Six Months Ended June 30,

($ in 2020 2019 Change 2020 2019 Changemillions)



Annuitycontract $ 111.8 $ 109.0 2.6 % $ 229.5 $ 216.3 6.1 %deposits*

Annuity assetsunder 4,324.3 4,170.3 3.7 %management ^(1)

Total assetsunder 7,952.8 7,801.5 1.9 %administration^(2)

Retirement net 9.7 (25.0 ) N.M. 8.8 (12.8 ) N.M. income (loss)

Retirement 9.7 3.0 223.3 % 8.8 15.2 -42.1 %core earnings*

Retirementcore earnings 6.0 7.4 -18.9 % 8.3 18.0 -53.9 %excluding DACunlocking*

N.M. - Not meaningful. (1) Amount reported as of June 30, 2020 excludes $627.6 of assets under management held under modified coinsurance reinsurance. (2) Includes Annuity AUM, Brokerage and Advisory AUA, and Recordkeeping AUA.

Annuity contract deposits rose 2.6% over prior year, reflecting the value educators continue to see in our Retirement savings products. Total cash value persistency remained strong at 94.9% for variable annuities and 94.2% for fixed annuities.

Reflecting the 2019 annuity reinsurance transaction, Horace Mann currently has $4.3 billion in annuity assets under management, including $2.1 billion of fixed annuities, $1.7 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 3.9% from year-end 2019, primarily due to market volatility.

The segment recorded net income of $9.7 million for the quarter, benefiting from expense savings as well as favorable DAC unlocking from the recovery of the equity markets in the period. In last year's second quarter, the segment recorded a net loss, largely due to the impairment of $28.0 million of goodwill as a result of the annuity reinsurance transaction, as well as unfavorable DAC unlocking due to the accelerated amortization of the DAC asset associated with the reinsured block.

Core earnings excluding DAC unlocking for the quarter were down due to lower limited partnership earnings as a result of the equity and credit market volatility in the first quarter.

Life Segment Has Steady Sales of Recurring Premium Products

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

Three Months Ended June 30, Six Months Ended June 30,

($ in millions) 2020 2019 Change 2020 2019 Change



Life sales* $ 3.6 $ 5.0 -28.0 % $ 6.9 $ 9.3 -25.8 %

Life mortality costs 9.2 7.5 22.7 % 19.3 18.0 7.2 %

Life net income / core 1.9 5.2 -63.5 % 2.5 8.5 -70.6 %earnings*

Sales of recurring premium Life products were relatively consistent with last year's second quarter, although lower single premium product sales drove overall lower sales. Life core earnings* largely reflected lower net investment income and mortality costs in line with expectations; the company had favorable mortality experience in the second quarter of 2019. Life persistency of 95.8% was consistent with the prior year period.

Investment Portfolio Well-Positioned for 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 June 30, Six Months Ended June 30,

($ in 2020 2019 Change 2020 2019 Changemillions)



Pretax netinvestmentincome - $ 56.5 $ 70.3 -19.6 % $ 115.1 $ 163.1 -29.4 %investmentportfolio

Pretaxinvestmentincome - 23.9 23.2 3.0 % 47.6 23.2 105.2 %depositasset onreinsurance

Totalpretax net 80.4 93.5 -14.0 % 162.7 186.3 -12.7 %investmentincome

Pretax netinvestment 3.2 146.3 N.M. (15.3 ) 153.7 N.M. gains(losses)

Pretax netunrealizedinvestmentgains 417.6 292.5 42.8 %(losses) onfixedmaturitysecurities

Investmentyield,excludinglimited 4.39 % 4.74 % -0.35 pts 4.45 % 4.79 % -0.34 ptspartnershipinterests,pretax -annualized

N.M. - Not meaningful.

Total net investment income declined 14.0% year-over-year. Net investment income on the managed portfolio declined 19.6% because of mark-to-market valuation adjustments on limited partnership and commercial mortgage loan fund investments that report on a one-quarter lag.

Second-quarter pretax net investment gains were $3.2 million, including $0.5 million in other-than-temporary impairment charges. The company's fixed maturity securities portfolio is in a net unrealized investment gain position of $417.6 million at June 30, 2020.

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

At June 30, 2020, shareholders' equity was $1.64 billion, or $39.69 per share. Excluding net unrealized investment gains on fixed maturity securities, shareholders' equity was $1.36 billion, or $32.93 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 June 30, 2020, total debt was $437.2 million, with $135.0 million outstanding on the company's line of credit. The debt-to-capital ratio* was 24.3%.

Quarterly Webcast

Horace Mann's senior management will discuss the company's second quarter financial results with investors on August 7, 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 March 31, 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 Six Months Ended June 30, June 30,

2020 2019 % 2020 2019 % Change Change

EARNINGS SUMMARY

Net income $ 30.5 $ 93.8 -67.5 % $ 49.0 $ 126.0 -61.1 %

Net investmentgains (losses), 2.5 114.7 N.M. (12.0 ) 120.5 N.M. after tax

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

Core earnings* 28.0 7.1 294.4 % 61.0 33.5 82.1 %



Per diluted share:

Net income $ 0.73 $ 2.24 -67.4 % $ 1.17 $ 3.01 -61.1 %

Net investmentgains (losses), $ 0.06 $ 2.74 N.M. $ (0.28 ) $ 2.88 N.M. after tax

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

Core earnings* $ 0.67 $ 0.17 294.1 % $ 1.45 $ 0.80 81.3 %

Weighted averagenumber of sharesand 42.0 41.9 0.2 % 42.0 41.9 0.2 %equivalent shares(in millions) -Diluted



RETURN ON EQUITY

Net income returnon equity - LTM^ 6.9 % 8.6 % 6.9 % 8.6 % (1)

Net income returnon equity - 7.8 % 25.7 % 6.1 % 18.1 % annualized

Core return on 9.0 % 2.9 % 9.0 % 2.9 % equity - LTM* ^(2)

Core return onequity - 8.3 % 2.3 % 9.0 % 5.4 % annualized*



FINANCIAL POSITION

Per share:^ (3)

Book value $ 39.69 $ 36.41 9.0 %

Effect of netunrealizedinvestment gains $ 6.76 $ 4.93 37.1 %on fixed maturitysecurities ^(4)

Dividends paid $ 0.30 $ 0.2875 4.3 % $ 0.60 $ 0.575 4.3 %

Ending number ofshares outstanding 41.3 41.2 0.2 %(in millions) ^(3)

Total assets $ 12,571.7 $ 11,779.4 6.7 %

Short-term debt 135.0 - N.M.

Long-term debt 302.2 297.9 1.4 %

Totalshareholders' 1,639.8 1,499.7 9.3 %equity



ADDITIONAL INFORMATION

Net investment gains (losses)

Before tax $ 3.2 $ 146.3 N.M. $ (15.3 ) $ 153.7 N.M.

After tax 2.5 114.7 N.M. (12.0 ) 120.5 N.M.

Per share, diluted $ 0.06 $ 2.74 N.M. $ (0.28 ) $ 2.88 N.M.

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 41,315,424 at June 30, 2020 and 41,185,721(3) at June 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 Six Months Ended June 30, June 30,

2020 2019 % Change 2020 2019 % Change

STATEMENTS OF OPERATIONS

Insurance premiumsand contract charges $ 225.4 $ 208.1 8.3 % $ 461.7 $ 417.9 10.5 %earned

Net investment 80.4 93.5 -14.0 % 162.7 186.3 -12.7 %income

Net investment gains 3.2 146.3 N.M. (15.3 ) 153.7 N.M. (losses)

Other income 5.9 6.2 -4.8 % 13.1 12.1 8.3 %

Total revenues 314.9 454.1 -30.7 % 622.2 770.0 -19.2 %



Benefits, claims and 143.0 152.7 -6.4 % 281.7 292.1 -3.6 %settlement expenses

Interest credited 50.7 53.6 -5.4 % 102.2 106.5 -4.0 %

Operating expenses 55.7 57.3 -2.8 % 116.4 113.5 2.6 %

DAC unlocking and 20.4 31.6 -35.4 % 50.4 56.6 -11.0 %amortization expense

Intangible asset 3.7 0.6 N.M. 7.4 1.1 N.M. amortization expense

Interest expense 4.0 3.3 21.2 % 8.2 6.6 24.2 %

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

Total benefits, 277.5 327.1 -15.2 % 566.3 604.4 -6.3 %losses and expenses



Income before income 37.4 127.0 -70.6 % 55.9 165.6 -66.2 %taxes

Income tax expense 6.9 33.2 -79.2 % 6.9 39.6 -82.6 %

Net income $ 30.5 $ 93.8 -67.5 % $ 49.0 $ 126.0 -61.1 %



PREMIUMS WRITTEN AND CONTRACT DEPOSITS*

Property and $ 156.1 $ 174.3 -10.4 % $ 309.7 $ 336.0 -7.8 %Casualty

Supplemental 33.7 - - 66.3 - -

Annuity contract 111.8 109.0 2.6 % 229.5 216.3 6.1 %deposits

Life 27.6 28.4 -2.8 % 52.4 54.8 -4.4 %

Total $ 329.2 $ 311.7 5.6 % $ 657.9 $ 607.1 8.4 %



SEGMENT NET INCOME (LOSS)

Property and $ 11.3 $ 5.1 121.6 % $ 37.9 $ 20.1 88.6 %Casualty

Supplemental 9.5 - - 20.0 - -

Retirement 9.7 (25.0 ) 138.8 % 8.8 (12.8 ) 168.8 %

Life 1.9 5.2 -63.5 % 2.5 8.5 -70.6 %

Corporate and Other (1.9 ) 108.5 -101.8 % (20.2 ) 110.2 -118.3 %^(1)

Net income $ 30.5 $ 93.8 -67.5 % $ 49.0 $ 126.0 -61.1 %

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 Company(1) 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.

HORACE MANN EDUCATORS CORPORATION

Business Segment Overview (Unaudited)

($ in Millions)

Three Months Ended Six Months Ended June 30, June 30,

2020 2019 Change 2020 2019 Change

PROPERTY and CASUALTY

Written premiums* $ 156.1 $ 174.3 -10.4 % $ 309.7 $ 336.0 -7.8 %

Premiums earned 156.2 171.3 -8.8 % 322.7 342.1 -5.7 %

Net investment income 6.3 12.7 -50.4 % 16.6 22.9 -27.5 %

Other income 0.8 0.8 - % 1.6 1.2 33.3 %

Losses and lossadjustment expenses 108.2 132.4 -18.3 % 212.6 249.2 -14.7 %(LAE)

Operating expenses(includes 40.9 45.4 -9.9 % 84.1 91.9 -8.5 %amortization expense)

Interest expense 0.1 0.4 -75.0 % 0.3 0.7 -57.1 %

Income before income 14.1 6.6 113.6 % 43.9 24.4 79.9 %taxes

Net income / core 11.3 5.1 121.6 % 37.9 20.1 88.6 %earnings*

Net investment 5.5 10.7 -48.6 % 14.2 19.4 -26.8 %income, after tax



Catastrophe costs ^ (1)

After tax 27.4 17.5 56.6 % 34.4 26.0 32.3 %

Before tax 34.7 22.1 57.0 % 43.5 32.9 32.2 %

Prior years' reservesfavorable development, beforetax

Automobile - 1.0 -100.0 % 1.0 2.0 -50.0 %

Property and other 1.0 1.0 - % 1.0 2.0 -50.0 %

Total 1.0 2.0 -50.0 % 2.0 4.0 -50.0 %



Operating statistics:

Loss and lossadjustment expense 69.2 % 77.3 % -8.1 pts 65.9 % 72.8 % -6.9 ptsratio

Expense ratio 26.2 % 26.5 % -0.3 pts 26.1 % 26.9 % -0.8 pts

Combined ratio 95.4 % 103.8 % -8.4 pts 92.0 % 99.7 % -7.7 pts

Effect on the combined ratio of:

Catastrophe costs ^ 22.2 % 12.9 % 9.3 pts 13.5 % 9.6 % 3.9 pts(1)

Prior years'(favorable) reserve -0.6 % -1.2 % 0.6 pts -0.6 % -1.2 % 0.6 ptsdevelopment

Combined ratioexcluding the effectsof

catastrophe costs and 73.8 % 92.1 % -18.3 pts 79.1 % 91.3 % -12.2 ptsprior years' reserve

development(underlying combinedratio)*



Risks in force (in 609 646 -5.7 %thousands)

Automobile ^(2) 418 448 -6.7 %

Property 191 198 -3.5 %



Policy renewal rate - 12 months

Automobile 81.6 % 81.3 % 0.3 pts

Property 87.5 % 87.7 % -0.2 pts

N.M.- Not meaningful.

^ Includes allocated loss adjustment expenses and, when applicable,(1) catastrophe reinsurance reinstatement premiums.

^ Includes assumed risks in force of 4.(2)

HORACE MANN EDUCATORS CORPORATION

Business Segment Overview (Unaudited)

($ in Millions)

Three Months Ended Six Months Ended June 30, June 30,

2020 2019 Change 2020 2019 Change

SUPPLEMENTAL

Premiums andcontract charges $ 33.3 N/A N/A $ 66.3 N/A N/Aearned

Net investment 4.0 N/A N/A 7.5 N/A N/Aincome

Other income 0.6 N/A N/A 1.3 N/A N/A

Benefits 8.7 N/A N/A 19.4 N/A N/A

Change in reserves 3.8 N/A N/A 3.6 N/A N/A

Operating expenses(includes DACunlocking and 10.1 N/A N/A 20.2 N/A N/Aamortizationexpense)

Intangible assetamortization 3.2 N/A N/A 6.4 N/A N/Aexpense

Income before 12.1 N/A N/A 25.5 N/A N/Aincome taxes

Net income / core 9.5 N/A N/A 20.0 N/A N/Aearnings*



Benefits ratio ^(1) 37.5 % N/A N/A 34.7 % N/A N/A

Operating expense 26.6 % N/A N/A 26.9 % N/A N/Aratio ^(2)

Pretax profit 31.9 % N/A N/A 34.0 % N/A N/Amargin ^(3)



Premium persistency 89.3 % N/A N/A 89.3 % N/A N/A(rolling 12 months)

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 Six Months Ended June 30, June 30,

2020 2019 Change 2020 2019 Change

RETIREMENT

Contract deposits* $ 111.8 $ 109.0 2.6 % $ 229.5 $ 216.3 6.1 %

Variable 52.3 54.1 -3.3 % 110.1 102.9 7.0 %

Fixed 59.5 54.9 8.4 % 119.4 113.4 5.3 %

Contract charges 6.7 6.9 -2.9 % 14.1 15.5 -9.0 %earned

Net investment 31.2 39.5 -21.0 % 61.0 104.2 -41.5 %income

Interest credited 14.5 18.0 -19.4 % 30.2 59.7 -49.4 %

Net interest 16.7 21.5 -22.3 % 30.8 44.5 -30.8 %margin

Investment income- deposit asset on 23.9 23.2 3.0 % 47.6 23.2 105.2 %reinsurance

Interest credited 24.9 24.3 2.5 % 49.5 24.3 103.7 %- Reinsured block

Net interestmargin - Reinsured (1.0 ) (1.1 ) 9.1 % (1.9 ) (1.1 ) -72.7 %block

Other income 4.1 5.0 -18.0 % 9.4 10.1 -6.9 %

Mortality loss andother reserve (1.2 ) (1.2 ) - % (2.8 ) (1.8 ) -55.6 %changes

Operating expenses(includes DACunlocking and 13.6 27.3 -50.2 % 38.5 48.3 -20.3 %amortizationexpense)

Intangible assetamortization 0.5 0.6 -16.7 % 1.0 1.1 -9.1 %expense

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

Income (loss)before income 11.2 (24.8 ) N.M. 10.1 (10.2 ) N.M. taxes

Net income (loss) 9.7 (25.0 ) N.M. 8.8 (12.8 ) N.M.

Core earnings 9.7 3.0 223.3 % 8.8 15.2 -42.1 %



Pretax incomeincrease (decrease) due toevaluation of:

Deferred policy $ 4.6 $ (5.6 ) N.M. $ 0.6 $ (3.6 ) N.M. acquisition costs

Guaranteed minimumdeath benefit 0.2 - N.M. (0.1 ) 0.1 N.M. reserve

Retirementcontracts in force 230 227 1.3 %(in thousands)

Annuityaccumulatedaccount value ondeposit / 4,324.3 $ 4,170.3 3.7 %

Assets undermanagement

Variable ^(1) 1,689.3 1,619.3 4.3 %

Fixed 2,635.0 2,551.0 3.3 %

Annuityaccumulated value retention - 12months

Variable 94.9 % 94.3 % 0.6 ptsaccumulations

Fixed 94.2 % 93.9 % 0.3 ptsaccumulations



LIFE

Premiums and $ 27.6 $ 28.4 -2.8 % $ 52.4 $ 54.8 -4.4 %contract deposits*

Premiums andcontract charges 29.2 29.9 -2.3 % 58.6 60.3 -2.8 %earned

Net investment 15.6 18.3 -14.8 % 31.2 36.4 -14.3 %income

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

Death benefits/mortality cost/ 21.1 19.1 10.5 % 43.3 41.1 5.4 %change in reserves

Interest credited 11.3 11.3 - % 22.5 22.5 - %

Operating expenses(includes DACunlocking and 10.1 11.2 -9.8 % 21.0 22.6 -7.1 %amortizationexpense)

Income before 2.3 6.7 -65.7 % 3.0 10.7 -72.0 %income taxes

Net income / core 1.9 5.2 -63.5 % 2.5 8.5 -70.6 %earnings*

Pretax incomeincrease (decrease) due toevaluation of:

Deferred policy $ 0.2 $ 0.1 N.M. $ 0.3 $ 0.1 N.M. acquisition costs

Life policies inforce (in 201 199 1.0 %thousands)

Life insurance in $ 19,565 $ 18,598 5.2 %force

Lapse ratio - 12months (Ordinary 4.2 % 4.5 % -0.3 ptslife insurance)

N.M.- Not meaningful.

^ Amount reported as of June 30, 2020 excludes $627.6 of assets under(1) management held under modified coinsurance reinsurance.

HORACE MANN EDUCATORS CORPORATION

Business Segment Overview (Unaudited)

($ in Millions)

Three Months Ended Six Months Ended June 30, June 30,

2020 2019 Change 2020 2019 % Change

CORPORATE AND OTHER ^ (1)

Components of income (loss) before tax:

Net investment gains $ 3.2 $ 146.3 N.M. $ (15.3 ) $ 153.7 N.M.(losses)

Interest expense (3.9 ) (2.9 ) -34.5 % (7.9 ) (5.9 ) -33.9 %

Other operatingexpenses, net (1.6 ) (4.9 ) 67.3 % (3.4 ) (7.1 ) 52.1 %investment income andother income

Income (loss) before (2.3 ) 138.5 101.7 % (26.6 ) 140.7 118.9 %income taxes

Net income (loss) (1.9 ) 108.5 101.8 % (20.2 ) 110.2 118.3 %



INVESTMENTS

Retirement and Life

Fixed maturitysecurities, at fairvalue $ 4,579.9 $ 4,637.0 -1.2 %(amortized cost 2020,$4,251.5; 2019,$4,388.8)

Equity securities, at 79.2 71.2 11.2 %fair value

Short-term 157.6 196.8 -19.9 %investments

Policy loans 151.4 153.5 -1.4 %

Limited partnerships 257.9 273.0 -5.5 %

Other investments 37.1 31.3 18.5 %

Total Retirement and 5,263.1 5,362.8 -1.9 %Life investments

Property and Casualty

Fixed maturitysecurities, at fairvalue 867.5 897.3 -3.3 %

(amortized cost 2020,$808.0; 2019, $853.0)

Equity securities, at 7.5 28.9 -74.0 %fair value

Short-term 14.4 32.7 -56.0 %investments

Limited partnerships 115.0 78.5 46.5 %

Other investments 1.1 1.0 10.0 %

Total Property and 1,005.5 1,038.4 -3.2 %Casualty investments

Supplemental

Fixed maturitysecurities, at fairvalue 574.6 N/A N/A

(amortized cost 2020,$544.9; 2019, N/A)

Equity securities, at 3.6 N/A N/Afair value

Short-term 11.7 N/A N/Ainvestments

Policy loans 0.8 N/A N/A

Limited partnerships 19.3 N/A N/A

Other investments 1.8 N/A N/A

Total Supplemental 611.8 N/A N/Ainvestments

Corporate investments 0.4 18.4 -97.8 %

Total investments $ 6,880.8 $ 6,419.6 7.2 %



Net investment income- investment portfolio

Before tax $ 56.5 $ 70.3 -19.6 % $ 115.1 $ 163.1 -29.4 %

After tax 45.2 56.2 -19.6 % 92.0 130.2 -29.3 %

Investment income -deposit asset on reinsurance

Before tax $ 23.9 23.2 N.M. $ 47.6 23.2 N.M.

After tax 18.9 18.3 N.M. 37.6 18.3 N.M.

N.M.- Not meaningful.

The Corporate and Other segment includes interest expense on debt and the^ impact of 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.

View source version on businesswire.com: https://www.businesswire.com/news/home/20200806005947/en/

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