hmn-20220201
0000850141false00008501412022-02-012022-02-01


UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549

FORM 8-K

CURRENT REPORT

Pursuant to Section 13 or 15(d) of The Securities Exchange Act of 1934

Date of Report: February 1, 2022

HORACE MANN EDUCATORS CORPORATION
(Exact name of registrant as specified in its charter)
Delaware1-1089037-0911756
(State of incorporation)(Commission File Number)(I.R.S. Employer Identification No.)


1 Horace Mann Plaza, Springfield, Illinois 62715‑0001
(Address of principal executive offices, including zip code)

Registrant's telephone number, including area code: 217‑789‑2500

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
☐Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
☐Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
☐
Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
☐
Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
Securities registered pursuant to Section 12(b) of the Act:
Title of each classTrading SymbolName of each exchange
on which registered
Common Stock, $0.001 par valueHMNNew York Stock Exchange

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter). ☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐



Forward-looking Information
Statements included in the accompanying news release that state Horace Mann Educators Corporation’s (Company) or its management’s intentions, hopes, beliefs, expectations or predictions of future events or the Company’s future financial performance are forward-looking within the meaning of the Private Securities Litigation Reform Act of 1995 and are subject to known and unknown risks, uncertainties and other factors. The Company 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. It is important to note that the Company’s actual results could differ materially from those projected in such forward-looking statements. Please refer to the Company’s most recent Annual Report on Form 10-K and Quarterly Report on Form 10-Q and the Company’s past and future filings and reports filed with the Securities and Exchange Commission for information concerning the important factors that could cause actual results to differ materially from those in forward-looking statements.
Item 2.02: Results of Operations and Financial Condition
On February 1, 2022, the Company issued a news release reporting its financial results for the three and twelve month periods ended December 31, 2021. A copy of the news release is attached as Exhibit 99.2 and is incorporated herein by reference.
The Company’s Investor Supplement and Investor Presentation will also be posted on the investors page of its website, investors.horacemann.com.
Item 9.01: Financial Statements and Exhibits
(d)Exhibits.
Exhibit 99.1    Glossary of Selected Terms.
Exhibit 99.2    News release dated February 1, 2022 reporting financial results for the three and twelve month periods ended December 31, 2021.
Exhibit 104    Cover Page Interactive Data File (formatted as Inline XBRL)

1

SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

HORACE MANN EDUCATORS CORPORATION
By:/s/ Kimberly A. Johnson
Name:Kimberly A. Johnson
Title:Senior Vice President & Controller
(Principal Accounting Officer)

Date: February 1, 2022
2

Exhibit 99.1
Glossary of Selected Terms

The following measures are used by the Company’s management to evaluate performance against historical results and establish targets on a consolidated basis. A number of these measures are components of net income or the balance sheet but, in some cases, are not based on accounting principles generally accepted in the United States of America (non-GAAP) under applicable SEC rules because they are not displayed as separate line items in the Consolidated Statements of Operations or Consolidated Balance Sheets or are not required to be disclosed in the Notes to the Consolidated Financial Statements or, in some cases, there is inclusion or exclusion of certain items not ordinarily included or excluded in accordance with accounting principles generally accepted in the United States of America (GAAP).
In the opinion of the Company’s management, a discussion of these measures provides investors, financial analysts, rating agencies and other financial statement users with a better understanding of the significant factors that comprise the Company’s periodic results of operations and how management evaluates the Company's financial performance. Internally, the Company's management uses the measures to evaluate performance against historical results, to establish financial targets on a consolidated basis and for other reasons.
Some of these measures exclude net investment gains (losses), net of tax, and/or net unrealized investment gains on fixed maturity securities, net of tax, which can be significantly impacted by both discretionary and other economic factors and are not necessarily indicative of operating trends.
Other companies may calculate these measures differently, and, therefore, their measures may not be comparable to those used by the Company’s management.
Book value per share excluding the fair value adjustment for investments - The result of dividing total shareholders’ equity excluding after tax net unrealized investment gains and losses on securities, including the related effect on certain deferred policy acquisition costs, by ending shares outstanding. Book value per share is the most directly comparable GAAP measure. Management believes it is useful to consider the trend in book value per share excluding net unrealized investment gains and losses on securities in conjunction with book value per share to identify and analyze the change in net worth. Management also believes the non-GAAP measure is useful to investors because it eliminates the effect of items that can fluctuate significantly from period to period and are generally driven by economic developments, primarily financial market conditions, the magnitude and timing of which are generally not influenced by the Company’s underlying insurance operations.
Catastrophe costs - The sum of catastrophe losses, net of reinsurance and before income tax benefits that includes allocated loss adjustment expenses and reinsurance reinstatement premiums; excluding unallocated loss adjustment expenses.
Catastrophe losses - In categorizing property and casualty claims as being from a catastrophe, the Company utilizes the designations of the Property Claim Services, a subsidiary of Insurance Services Office, Inc., and additionally beginning in 2007, includes losses from all such events that meet the definition of covered loss in the Company’s primary catastrophe excess of loss reinsurance contract, and reports claims and claim expense amounts net of reinsurance recoverables. A catastrophe is a severe loss resulting from natural and man-made events within a particular territory, including risks such as hurricane, fire, earthquake, windstorm, explosion, terrorism and other similar events, that causes $25 million or more in insured property and casualty losses for the industry and affects a significant number of property and casualty insurers and policyholders. Each catastrophe has unique characteristics. Catastrophes are not predictable as to timing or amount of loss in advance. Their effects are not included in earnings or claim and claim expense reserves prior to occurrence. In the opinion of the Company’s management, a discussion of the impact of catastrophes is meaningful for investors to understand the variability in periodic earnings.







1

Core earnings (loss) - Consolidated net income (loss) excluding the after-tax impact of net investment gains (losses), discontinued operations, the after-tax impact of goodwill and intangible asset impairments, the effect of a change in tax laws and tax rates at enactment date, and cumulative effect of changes in accounting principles when applicable. Net income is the most comparable GAAP measure.
•Pretax core earnings (loss) - Pretax net income (loss) excluding pretax impact of net investment gains (losses), discontinued operations, pretax impact of goodwill and intangible asset impairments and cumulative effect of changes in accounting principles when applicable. Income before income taxes is the most comparable GAAP measure.
•Segment core earnings - Determined in the same manner as core earnings on a consolidated basis. Management uses segment core earnings to analyze each segment's performance and as a tool in making business decisions. Financial statement users also consider core earnings when analyzing the results and trends of insurance companies.
Core earnings (loss) per share - Core earnings on a per common share basis. Earnings per share is the most comparable GAAP measure.
Premiums written and contract deposits – Management utilizes this non-GAAP measure, which is based on statutory accounting principles, in analyzing and evaluating business growth. Premiums and contract charges earned is the most comparable GAAP measure.
Premiums written and contract deposits for the Company’s operating segments are as follows:
Property and Casualty
•Premiums written: Reflects the direct and assumed contractually determined amounts charged to policyholders for the effective period of the contract based on the terms and conditions of the contract and reflect gross premiums written less premiums ceded to reinsurers. The difference between premiums written and premiums earned is premiums unearned.
Supplemental and Life
•Premiums written and contract deposits: Reflects (1) the direct and assumed contractually determined amounts charged to policyholders for the effective period of the contract based on the terms and conditions of the contract and reflect gross premiums written less premiums ceded to reinsurers, and (2) the amount charged for policies in force during a fiscal period for traditional life business. Contract deposits include amounts received from customers on deposit-type contracts.
Retirement
•Net annuity contract deposits: Reflects total recurring deposits and single deposits/rollovers – net of contract deposits ceded to reinsurers.
Investment yield on fixed income portfolio, pretax and after tax - For the three month periods presented, investment yields are calculated by annualizing the result of year-to-date net investment income (adjusted to exclude investment income on deposit asset on reinsurance, investment income from limited partnership interests, and FHLB interest credited for the corresponding period) divided by the average quarter-end and beginning of quarter carrying amount of invested assets as presented in the Consolidated Balance Sheets adjusted to exclude FHLB funding agreements, the carrying amount of limited partnership interests, and gross unrealized investment gains/losses. For full year periods presented, investment yields are calculated by (i) summing the investment yields for each respective three month period applicable to the year and (ii) dividing that sum per the calculation in (i) by four. Net investment income is the most directly comparable GAAP measure.






2

Net income return on equity - LTM: The ratio of (1) trailing 12 month net income to (2) the average of ending shareholders’ equity for the current quarter end and the preceding four quarter ends - referred to as 5 quarter average shareholder's equity.
•Core return on equity - LTM: The ratio of (1) trailing 12 month core earnings to (2) 5 quarter average shareholders’ equity excluding net unrealized investment gains and losses on securities and the effect of a change in tax laws and tax rates at enactment date. Net income return on equity - LTM is the most comparable GAAP measure.
•Net income return on equity - Annualized: The ratio of (1) annualized net income to (2) the 2 quarter average shareholders' equity.
•Core return on equity - Annualized: The ratio of (1) annualized core earnings to (2) the 2 quarter average shareholders’ equity excluding net unrealized investment gains and losses on securities and the effect of a change in tax laws and tax rates at enactment date. Net income return on equity - Annualized is the most comparable GAAP measure.
Net reserves - Property and casualty unpaid claim and claim expense reserves net of anticipated reinsurance recoverables.
Prior years’ reserve development - A measure which the Company reports for its Property and Casualty segment which identifies the increase or decrease in net incurred claim and claim expense reserves at successive valuation dates for claims which occurred in previous calendar years. In the opinion of the Company’s management, a discussion of prior years’ loss reserve development is useful to investors as it allows them to assess the impact on current period earnings of incurred claims experience from the current calendar year and previous calendar years.
Property and casualty operating statistics - Operating measures utilized by the Company and the insurance industry regarding the relative profitability of property and casualty underwriting results.
•Loss ratio - The ratio of (1) the sum of net incurred losses and loss adjustment expenses to (2) net earned premiums.
•Underlying loss ratio - The sum of the Loss Ratio adjusted to remove the effect of catastrophe costs and prior years' reserve development. The Loss Ratio is the most directly comparable GAAP measure. Management believes this ratio provides a valuable measure of the Company's underlying underwriting performance that may be obscured by the effects of catastrophe costs and prior years' reserve development, the amounts of which may be significant and may vary significantly between periods.
•Expense ratio - The ratio of (1) the sum of operating expenses and the amortization of policy acquisition costs to (2) net earned premiums.
•Combined ratio - The sum of the Loss Ratio and the Expense Ratio.  A Combined Ratio less than 100% generally indicates profitable underwriting prior to the consideration of net investment income.
•Underlying combined ratio or combined ratio excluding catastrophe costs and prior years’ reserve development - The sum of the Loss Ratio and the Expense Ratio adjusted to remove the effect of catastrophe costs and prior years’ reserve development.  The Combined Ratio is the most directly comparable GAAP measure.  Management believes this ratio provides a valuable measure of the Company’s underlying underwriting performance that may be obscured by the effects of catastrophe costs and prior years’ reserve development, the amounts of which may be significant and may vary significantly between periods.

3

Sales – Sales data pertains to Horace Mann products and excludes authorized products sold by exclusive agents that are underwritten by third-party vendors Sales should not be viewed as a substitute for any GAAP measure, including "sales" as it relates to non-insurance companies, and the Company’s definition of sales, sales deposits or new annualized sales might differ from that used by other companies. The Company utilizes sales information as a performance measure that indicates the productivity of its agency force. Sales are also a leading indicator of future revenue trends.
Sales for the Company’s operating segments are as follows:
Property and Casualty
•Sales: Sales are measured as premiums to be collected over the 12 months following the sale of new automobile and property policies.
Supplemental
•Sales: Based on application received date on the submitted policy and measured as the submitted annual premium.
Life
•Sales: Sales are measured as premiums to be collected over the 12 months following the sale of new life policy as well as increases in contributions to certain life business.
•Annualized sales: Annualized sales are based on the total yearly premium that the Company would expect to receive if all first year recurring premium policies would remain in-force, plus 10% of single and indexed universal life excess premiums. Annualized sales measure activity associated with gaining new insurance business in the current period, and includes deposits received related to universal life-type products.

4

Exhibit 99.2
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News release for immediate release

Contact information:
Heather J. Wietzel, Vice President, Investor Relations
217-788-5144 | [email protected]
Horace Mann reports full-year 2021 net income of $3.39 per share and
record core earnings* of $3.59 per share
Fourth-quarter 2021 net income of $0.96 per share and core earnings* of $0.97 per share
•Full-year net income and core earnings per share ahead of prior year, largely due to 18% increase in net investment income on strong limited partnership portfolio returns
◦Full-year 2021 net income return on equity of 8.0% with core ROE of 10.3%
•Fourth quarter demonstrated value of multi-year emphasis on products, distribution and infrastructure to serve education market
◦Supplemental fourth-quarter sales highest since onset of pandemic; Life and Retirement fourth-quarter sales up year over year
◦Fourth-quarter earnings for each segment ahead of expectations due to strong net investment income despite after-tax catastrophe losses of $9 million and auto loss ratio returning to pre-pandemic level
•Book value per share up 1% and book value excluding net unrealized gains* up 7% from year-end 2020
•Expect 2022 EPS in range of $3.45-$3.65 and ROE near 10%; in 2023 and beyond, targeting 10% average annual EPS growth and sustained double-digit ROEs
◦2022 guidance includes at least 15 cents from newly acquired Madison National Life Insurance Company’s current business activity, as well as initial contributions of the strategic growth initiatives that drive results in 2023 and beyond
◦Guidance continues to reflect catastrophe loss assumption in line with 10-year average and net investment income contribution with limited partnership portfolio returns closer to the historical averages
◦Larger, more diverse organization should generate more than $50 million in excess capital each year, available to support growth and to return to shareholders

SPRINGFIELD, Ill., Feb. 1, 2022 — Horace Mann Educators Corporation (NYSE:HMN) today reported financial results for the three months ended December 31, 2021:
($ in millions, except per share amounts)Three Months Ended
December 31,		Twelve Months Ended
December 31,
20212020% Change20212020% Change
Total revenues$331.4 $352.3 -5.9 %$1,330.1 $1,310.4 1.5 %
Net income40.5 47.8 -15.3 %142.8 133.3 7.1 %
Net investment (losses) gains after tax(0.3)8.4 N.M.(8.6)(1.7)N.M.
Other expense - goodwill and intangible asset impairments, after tax— (8.1)N.M.— (8.1)N.M.
Core earnings*40.8 47.5 -14.1 %151.4 143.1 5.8 %
Per diluted share:
Net income0.96 1.13 -15.0 %3.39 3.17 6.9 %
Net investment (losses) gains after tax (0.01)0.19 N.M.(0.20)(0.04)N.M.
Other expense - goodwill and intangible asset impairments, after tax— (0.19)N.M.— (0.19)N.M.
Core earnings per diluted share*0.97 1.13 -14.2 %3.59 3.40 5.6 %
Book value per share43.66 43.22 1.0 %
Book value per share excluding net unrealized investment gains on fixed maturity securities*    36.64 34.38 6.6 %
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.
The Horace Mann Companies 1 Horace Mann Plaza Springfield, Illinois 62715-0001
217-789-2500 www.horacemann.com


“For the second consecutive year, Horace Mann reported record core earnings, with core return on equity again above 10%. All our business areas are showing some encouraging signs of momentum, although the pace continues to vary by segment and geography compared to the pre-pandemic environment — partially due to regional variations in the course of the pandemic and differing community responses,” said Horace Mann President and CEO Marita Zuraitis. “We continue to see strong growth in our Retirement line, with sales up 5% over prior year as educators continue to focus on their long-term financial success. We have long benefited from cross-sell opportunities through Retirement relationships in new districts. And despite the inherent seasonality of fourth-quarter benefit enrollments, the Supplemental segment posted its strongest sales quarter since the pandemic began. We are pleased with this progress and look forward to its acceleration in 2022.
“Our results continue to benefit from our intentional diversification into limited partnership investments and commercial mortgage loan funds investments,” Zuraitis continued. “As a result, net investment income for the year was ahead of our original guidance by about $33 million, or more than 75 cents per share. The benefit of the higher net investment income was partially offset by full-year catastrophe losses above our 10-year average by about $15 million, or approximately 35 cents per share.
“With the addition of Madison National Life on Jan. 1, we dramatically improved our value proposition for school districts and educators,” Zuraitis said. “In 2022, we aim to leverage our expanded product offerings to increase our share of the educator market. Whether educators are buying insurance and financial solutions from a local, trusted advisor; through one of our direct channels; or receiving them through their school district employer, Horace Mann can be the partner to provide it.
“We expect our acquisition of Madison National and acceleration of growth through all channels will help us achieve our targeted 2022 core EPS and ROE, as the contribution from our limited partnerships portfolio is expected to return to our average historical returns,” Zuraitis said. “We also are assuming catastrophe losses in line with our 10-year average.
“Beginning in 2023, we are targeting 10% average annual EPS growth and sustained double-digit ROEs, driven by our profitable growth,” Zuraitis added. “We expect the stronger and more diverse company that Horace Mann has become to generate more than $50 million in excess capital each year. Going forward, we expect to continue to prioritize growth in our capital plans. At the same time, we are committed to maintaining our 13-year track record of annual increases in our cash dividend and returning capital to shareholders through repurchases.”
Segment guidance
2022 guidance includes accretion from Madison National’s current business activity as well as estimates of the initial contributions of strategic growth initiatives. Full-year net investment income is estimated to total about $310 million to $320 million, in line with 2021, with limited partnership portfolio returns modeled closer to the historical averages. Beginning with first quarter 2022, Horace Mann will report financial results in three operating segments. The new Life & Retirement segment will combine the current Life and Retirement segments. The Supplemental & Group Benefits segment will include the Supplemental business as well as the results of Madison National Life.
•Property & Casualty segment 2022 core earnings are expected to be in the range of $44 million to $48 million. In 2022, the underlying auto loss ratio is expected to be slightly higher than 2021 level as auto frequency remains near pre-pandemic levels, with inflation driving higher severity in both auto and property lines. Guidance reflects a catastrophe loss assumption of approximately 9.5 points on the combined ratio, in line with the 10-year average. The longer-term combined ratio target remains 95-96%. Net investment income is expected to be lower in this segment, as it benefited from strong limited partnership returns in 2021.
•Life & Retirement segment 2022 core earnings are expected to be in the range of $74 million to $77 million. Net investment income is expected to be up slightly, maintaining the net investment spread near the 2021 level. Guidance reflects mortality returning to actuarial expectations.
•Supplemental & Group Benefits segment 2022 core earnings are expected to be in the range of $47 million to $50 million. Claims utilization for supplemental and disability products is expected to be near pre-pandemic levels leading to a benefit ratio about 35% for voluntary products and about 50% for employer-paid products. As a result of the Madison National transaction, 2022 total amortization of intangible assets is expected to increase by 8 to 12 cents per share over 2021.
Reported results for 2021, discussed on the following pages, are based on the current four operating segments.
2

Property & Casualty segment full-year core earnings of $57 million with underlying combined ratio at 87.7%
(All comparisons vs. same period in 2020, unless noted otherwise)
The Property & Casualty insurance segment primarily markets private passenger auto insurance and residential home insurance. Horace Mann offers standard auto coverages, including liability, collision and comprehensive. Property coverage includes both homeowners and renters policies. For both auto and property coverage, Horace Mann offers educators a discounted rate and the Educator Advantage® package of features. The Property & Casualty segment represented 51% of 2021 total revenues and contributed $57.0 million to 2021 core earnings.
($ in millions)Three Months Ended
December 31,		Twelve Months Ended
December 31,
20212020Change20212020Change
Property & Casualty premiums written*$146.6 $153.0 -4.2 %$607.8 $635.5 -4.4 %
Property & Casualty net income / core earnings*14.5 22.8 -36.4 %57.0 76.5 -25.5 %
Property & Casualty combined ratio99.9 %90.2 %9.7  pts99.2 %92.7 %6.5  pts
Property & Casualty underlying loss ratio*64.4 %58.7 %5.7  pts61.0 %54.9 %6.1  pts
Property & Casualty expense ratio28.3 %28.3 %—  pts26.7 %26.4 %0.3  pts
Property & Casualty catastrophe losses7.2 %3.8 %3.4  pts12.7 %13.0 %-0.3  pts
Property & Casualty underlying combined ratio*92.7 %87.0 %5.7  pts87.7 %81.3 %6.4  pts
Auto combined ratio108.4 %96.2 %12.2  pts96.1 %88.0 %8.1  pts
Auto underlying loss ratio*79.3 %67.4 %11.9  pts69.0 %60.4 %8.6  pts
Property combined ratio84.7 %79.0 %5.7  pts105.4 %102.0 %3.4  pts
Property underlying loss ratio*37.3 %42.1 %-4.8  pts45.9 %44.3 %1.6  pts

The Property & Casualty segment was profitable for both the fourth quarter and full year with stronger net investment income. Catastrophe loss costs were again above historic averages. Auto loss costs were higher in both the fourth quarter and full year largely due to the lower level of loss activity in 2020 periods. This was the result of frequency returning from the pandemic lows experienced in 2020 as well as elevated severity in 2021.
In the fourth quarter, policyholder catastrophe losses were $11.1 million, which added 7.2 points to the company’s combined ratio, compared to $6.1 million or 3.8 points in last year’s fourth quarter. The largest event was the Colorado wildfires in late December, with $5.3 million in policyholder losses.
The full-year auto underlying loss ratio was 69.0%, compared to the prior year auto underlying loss ratio of 60.4%, as driving patterns steadily returned to a more normal level and inflation continued to affect severity. The full-year property underlying loss ratio rose slightly, also reflecting the effect of inflation.
Property & Casualty full-year premiums written of $607.8 million were below last year with new business volume remaining below historical levels due to the continuing impact of the pandemic on sales. For the full year, auto average premiums were flat, even as miles driven has begun to rise. Property average premiums rose as adjustments to coverage values continue to take effect. Rate increases are expected to play an even greater role in the coming quarters.
3

Supplemental segment full-year core earnings of $46 million with fourth-quarter sales highest since pandemic began
(All comparisons vs. same period in 2020, unless noted otherwise)
The Supplemental insurance segment specializes in marketing supplemental insurance products, including cancer, heart, hospital, supplemental disability and accident for the education market. The segment represented 11% of 2021 total revenues and contributed $46.3 million to 2021 core earnings.
($ in millions)Three Months Ended
December 31,		Twelve Months Ended
December 31,
20212020Change20212020Change
Sales*$2.2 $1.4 57.1 %$6.4 $7.2 -11.1 %
Premiums earned31.0 31.9 -2.8 %125.3 130.7 -4.1 %
Supplemental net income / core earnings*11.5 12.5 -8.0 %46.3 43.1 7.4 %
Pretax profit margin(1)
38.4 %41.5 %-3.1  pts38.7 %36.4 %2.3  pts
(1)    Measured to total revenues.
Supplemental segment sales were $2.2 million in the fourth quarter, a 57.1% increase over last year and the highest quarter since the start of the pandemic. Persistency remained very strong at 92.5%.
Strong core earnings for both the quarter and the full year reflected higher net investment income, as well as favorable business trends including some continued benefit from short-term changes in policyholder behavior due to the pandemic. Segment expenses for the year include the non-cash impact of amortization of intangible assets under purchase accounting that reduced core earnings by $11.7 million pretax. Margins remain above management’s longer-term expectations because of the pandemic-related changes in policyholder behavior.
Retirement segment full-year core earnings excluding DAC unlocking of $51 million, benefiting from strong net investment spread
(All comparisons vs. same period in 2020, unless noted otherwise)
The Retirement segment primarily markets 403(b) tax-qualified fixed, fixed index and variable annuities; the Horace Mann Retirement Advantage® open architecture platform for 403(b)(7) and other defined contribution plans; and other retirement products to educators. Horace Mann is one of the largest participants in the K-12 educator portion of the 403(b) tax-qualified annuity market, measured by 403(b) net written premium on a statutory accounting basis. The Retirement segment represented 24% of 2021 total revenues and contributed $52.0 million to 2021 core earnings.
($ in millions)Three Months Ended
December 31,		Twelve Months Ended
December 31,
20212020Change20212020Change
Net annuity contract deposits*$104.2 $103.0 1.2 %$448.8 $429.1 4.6 %
Annuity assets under management(1)
5,339.8 4,841.8 10.3 %
Total assets under administration(2)
9,509.7 8,684.0 9.5 %
Retirement net income15.8 3.5 351.4 %52.0 20.1 158.7 %
Retirement core earnings*15.8 11.6 36.2 %52.0 28.2 84.4 %
Retirement core earnings excluding DAC unlocking*16.2 11.2 44.6 %51.0 26.8 90.3 %
(1)     Amount reported as of December 31, 2021 excludes $834.6 million of assets under management held under modified coinsurance reinsurance.
(2)    Includes Annuity AUM, Brokerage and Advisory AUA, and Recordkeeping AUA.

Net annuity contract deposits rose 4.6% for the full year. Horace Mann’s relationship with educators often begins with 403(b) retirement savings products, including the company’s attractive annuity products, which provide encouraging cross-sell opportunities. Total cash value persistency remained strong at 94.4% for the fixed and variable annuities.
4

Horace Mann currently has $5.3 billion in annuity assets under management, including $2.2 billion of fixed annuities, $2.6 billion of variable annuities and $0.5 billion of fixed indexed annuities. Assets under administration, which includes Retirement Advantage and other advisory and recordkeeping assets, was up 9.5% from a year ago, as assets under management continued to rise due to strong equity market performance over the past 12 months.
The net interest spread improved again in the fourth quarter to 290 points for the full year, reflecting the strong returns from the limited partnership portfolio. Core earnings excluding DAC unlocking was up 90.3% for the year, primarily due to the strong net interest margin.
Life segment full-year core earnings were $16 million
(All comparisons vs. same period in 2020, unless noted otherwise)
The Life insurance segment primarily markets traditional term and whole life insurance products to educators. The Life segment represented 14% of 2021 total revenues and contributed $16.1 million to 2021 core earnings.
($ in millions)Three Months Ended
December 31,		Twelve Months Ended
December 31,
20212020Change20212020Change
Total sales*$3.1 $3.1 — %$13.9 $12.7 9.4 %
Annualized sales*2.3 2.1 9.5 %8.7 8.5 2.4 %
Life mortality costs10.1 10.5 -3.8 %43.5 38.8 12.1 %
Life net income / core earnings*5.3 3.6 47.2 %16.1 10.4 54.8 %
Life annualized sales were up 2.4% over last year, with fourth-quarter sales up 9.5% on continued sales of recurring premium policies. Life core earnings for the year rose 54.8%, reflecting strong net investment income growth offset by higher mortality costs. Full-year persistency for life products of 96.5% remains in line with prior periods.
Investment portfolio sees strong returns from limited partnership portfolio
(All comparisons vs. same period in 2020, unless noted otherwise)
Horace Mann’s investment strategy is primarily focused on generating income to support product liabilities, and balances principal protection and risk. Total net investment income includes net investment income on the investment portfolio managed by Horace Mann, as well as accreted investment income on the deposit asset on reinsurance related to the company’s reinsurance of policy liabilities related to legacy individual annuities written in 2002 or earlier.
($ in millions)Three Months Ended
December 31,		Twelve Months Ended
December 31,
20212020Change20212020Change
Pretax net investment income - investment portfolio$88.1 $76.0 15.9 %$321.4 $260.3 23.5 %
Pretax investment income - deposit asset on
reinsurance
26.0 25.2 3.2 %101.1 97.3 3.9 %
Total pretax net investment income114.1 101.2 12.7 %422.5 357.6 18.1 %
Pretax net investment (losses) gains(0.4)10.5 N.M.(11.0)(2.3)N.M.
Pretax net unrealized investment gains on fixed
maturity securities
441.6 556.7 -20.7 %
Investment yield on fixed income portfolio, pretax -
  annualized		4.27 %4.20 %0.07  pts4.25 %4.23 %0.02  pts
N.M. - Not meaningful.

Total net investment income was up 18.1% or $64.9 million for the year. Net investment income on the managed portfolio rose 23.5%, reflecting strong returns on the limited partnership portfolio throughout the year, largely due to private equity and venture capital investments. The company’s fixed maturity securities portfolio is in a net unrealized investment gain position of $441.6 million pretax at December 31, 2021.

5

Book value excluding net unrealized investment gains up 7% year over year
At December 31, 2021, shareholders’ equity was $1.81 billion, or $43.66 per share. Excluding net unrealized investment gains on fixed maturity securities, shareholders’ equity was $1.52 billion, or $36.64 per share.* During the fourth quarter, Horace Mann repurchased 96,073 shares of common stock at an average price of $37.14. As of December 31, 2021, $15.3 million remained authorized for future share repurchases under the share repurchase program.
The company closed the acquisition of Madison National Life, a provider of group life, disability and specialty health insurance for educators and public sector employees, on Jan. 1, 2022. The transaction was funded with cash on hand and additional borrowings on the company’s revolving credit facility made in late 2021.
As a result, at December 31, 2021, total debt was $502.6 million, with $249.0 million outstanding on the company’s line of credit. The ratio of debt-to-capital excluding net unrealized investment gains* was 24.9% at year-end 2021, which aligns with levels appropriate for the company’s current financial strength ratings.
Investor webcast
Horace Mann’s senior management will discuss the company’s fourth-quarter and full-year financial results with investors on Feb. 2, 2022 at 10:00 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 is the largest financial services company focused on helping America’s educators and others who serve the community achieve lifelong financial success. The company offers individual and group life insurance and financial solutions tailored to the needs of the educator community. Founded by Educators for Educators® 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 quarterly period ended September 30, 2021 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.
# # #
6


HORACE MANN EDUCATORS CORPORATION
Financial Highlights (Unaudited)

($ in millions, except per share data)Three Months Ended
December 31,		Twelve Months Ended
December 31,
20212020% Change20212020% Change
Earnings Summary
Net income$40.5 $47.8 -15.3 %$142.8 $133.3 7.1 %
Net investment (losses) gains, after tax(0.3)8.4 N.M.(8.6)(1.7)N.M.
Other expense - goodwill and intangible asset impairments, after tax— (8.1)N.M.— (8.1)N.M.
Core earnings*40.8 47.5 -14.1 %151.4 143.1 5.8 %
Per diluted share:
Net income$0.96 $1.13 -15.0 %$3.39 $3.17 6.9 %
Net investment (losses) gains, after tax(0.01)0.19 N.M.(0.20)(0.04)N.M.
Other expense - goodwill and intangible asset impairments, after tax— (0.19)N.M.— (0.19)N.M.
Core earnings*0.97 1.13 -14.2 %3.59 3.40 5.6 %
Weighted average number of shares and
equivalent shares (in millions) - Diluted
42.2 42.2 — %42.2 42.0 0.5 %
Return on Equity
Net income return on equity - LTM(1)
8.0 %8.1 %8.0 %8.1 %
Net income return on equity - annualized9.0 %10.9 %
Core return on equity - LTM*(2)
10.3 %10.5 %10.3 %10.5 %
Core return on equity - annualized*10.9 %13.5 %
Financial Position
Per share:(3)
Book value$43.66 $43.22 1.0 %
Effect of net unrealized investment gains on
fixed maturity securities(4)
$7.02 $8.84 -20.6 %
Dividends paid$0.31 $0.30 3.3 %$1.24 $1.20 3.3 %
Ending number of shares outstanding (in millions)(3)
41.4 41.4 — %
Total assets$14,383.9 $13,471.8 6.8 %
Short-term debt249.0 135.0 84.4 %
Long-term debt253.6 302.3 -16.1 %
Total shareholders’ equity1,807.4 1,790.1 1.0 %
Additional Information   
Net investment (losses) gains   
Before tax$(0.4)$10.5 N.M.$(11.0)$(2.3)N.M.
After tax(0.3)8.4 N.M.(8.6)(1.7)N.M.
Per share, diluted$(0.01)$0.19 N.M.$(0.20)$(0.04)N.M.
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 41,393,484 at December 31, 2021 and 41,414,218 at December 31, 2020.
(4)    Net of the related impact on deferred policy acquisition costs and applicable deferred taxes.
7


HORACE MANN EDUCATORS CORPORATION
Statements of Operations and Consolidated Data (Unaudited) 

($ in millions)Three Months Ended
December 31,		Twelve Months Ended
December 31,
20212020% Change 20212020% Change
Statements of Operations
Premiums and contract charges earned$210.8 $233.7 -9.8 %$889.6 $930.7 -4.4 %
Net investment income114.1 101.2 12.7 %422.5 357.6 18.1 %
Net investment (losses) gains(0.4)10.5 N.M.(11.0)(2.3)N.M.
Other income6.9 6.9 — %29.0 24.4 18.9 %
Total revenues331.4 352.3 -5.9 %1,330.1 1,310.4 1.5 %
Benefits, claims and settlement expenses182.2 187.1 -2.6 %782.1 773.5 1.1 %
Operating expenses68.7 64.7 6.2 %251.5 237.8 5.8 %
DAC unlocking and amortization expense24.2 24.9 -2.8 %94.7 99.9 -5.2 %
Intangible asset amortization expense3.2 3.5 -8.6 %13.0 14.4 -9.7 %
Interest expense3.5 3.5 — %13.9 15.2 -8.6 %
Other expense - goodwill and intangible asset impairments— 10.0 N.M.— 10.0 N.M.
Total benefits, losses and expenses281.8 293.7 -4.1 %1,155.2 1,150.8 0.4 %
Income before income taxes49.6 58.6 -15.4 %174.9 159.6 9.6 %
Income tax expense9.1 10.8 -15.7 %32.1 26.3 22.1 %
Net income$40.5 $47.8 -15.3 %$142.8 $133.3 7.1 %
Premiums Written and Contract Deposits*
Property & Casualty$146.6 $153.0 -4.2 %$607.8 $635.5 -4.4 %
Supplemental31.1 32.0 -2.8 %125.3 130.3 -3.8 %
Net annuity contract deposits104.2 103.0 1.2 %448.8 429.1 4.6 %
Life32.1 30.8 4.2 %116.9 110.1 6.2 %
Total$314.0 $318.8 -1.5 %$1,298.8 $1,305.0 -0.5 %
Segment Net Income (Loss)
Property & Casualty$14.5 $22.8 -36.4 %$57.0 $76.5 -25.5 %
Supplemental11.5 12.5 -8.0 %46.3 43.1 7.4 %
Retirement15.8 3.5 351.4 %52.0 20.1 158.7 %
Life5.3 3.6 47.2 %16.1 10.4 54.8 %
Corporate & Other(1)
(6.6)5.4 N.M.(28.6)(16.8)-70.2 %
Net income$40.5 $47.8 -15.3 %$142.8 $133.3 7.1 %
N.M. - Not meaningful.
(1)    Corporate & 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.
8


HORACE MANN EDUCATORS CORPORATION
Business Segment Overview (Unaudited)

($ in millions)Three Months Ended
December 31,		Twelve Months Ended
December 31,
20212020Change 20212020Change
Property & Casualty
Premiums written*$146.6 $153.0 -4.2 %$607.8 $635.5 -4.4 %
Premiums earned153.3 161.4 -5.0 %617.4 650.1 -5.0 %
Net investment income17.3 12.3 40.7 %61.1 42.6 43.4 %
Other income0.5 0.2 150.0 %4.5 2.3 95.7 %
Losses and loss adjustment expenses (LAE)109.7 100.0 9.7 %447.9 431.0 3.9 %
Operating expenses (includes amortization expense)43.3 45.7 -5.3 %164.8 171.7 -4.0 %
Interest expense— — N.M.0.1 0.4 -75.0 %
Income before income taxes18.1 28.2 -35.8 %70.2 91.9 -23.6 %
Net income / core earnings*14.5 22.8 -36.4 %57.0 76.5 -25.5 %
Net investment income, after tax14.1 10.2 38.2 %50.2 35.7 40.6 %
Catastrophe losses   
After tax8.8 4.8 83.3 %61.8 66.7 -7.3 %
Before tax11.1 6.1 82.0 %78.2 84.4 -7.3 %
Prior years’ reserve development, before tax(1)
  
Auto— — N.M.(5.0)(2.0)150.0 %
Property and other— (1.0)N.M.(2.2)(8.2)-73.2 %
Total— (1.0)N.M.(7.2)(10.2)-29.4 %
Operating statistics:   
Loss and loss adjustment expense ratio71.6 %61.9 %9.7  pts72.5 %66.3 %6.2  pts
Expense ratio28.3 %28.3 %—  pts26.7 %26.4 %0.3  pts
Combined ratio99.9 %90.2 %9.7  pts99.2 %92.7 %6.5  pts
Effect on the combined ratio of:   
Catastrophe losses7.2 %3.8 %3.4  pts12.7 %13.0 %-0.3  pts
Prior years’ reserve development(1)
— %-0.6 %0.6  pts-1.2 %-1.6 %0.4  pts
Combined ratio excluding the effects of
catastrophe losses and prior years’ reserve
development (underlying combined ratio)*
92.7 %87.0 %5.7  pts87.7 %81.3 %6.4  pts
Risks in force (in thousands)553 583 -5.1 %
Auto(2)
376 399 -5.8 %
Property177 184 -3.8 %
Policy renewal rate - 12 months   
Auto(3)
83.7 %81.2 %2.5  pts
Property(3)
88.3 %86.8 %1.5  pts
N.M. - Not meaningful.
(1)    (Favorable) unfavorable.
(2)    Includes assumed risks in force of 4.
(3)    For the twelve months ended December 31, 2021, retention data is an estimate due to system conversion.
9


HORACE MANN EDUCATORS CORPORATION
Business Segment Overview (Unaudited)

($ in millions)Three Months Ended
December 31,		Twelve Months Ended
December 31,
 20212020Change20212020Change
Supplemental   
Premiums and contract charges earned$31.0 $31.9 -2.8 %$125.3 $130.7 -4.1 %
Net investment income6.1 6.0 1.7 %24.8 17.8 39.3 %
Other income0.7 0.7 — %2.5 2.7 -7.4 %
Benefits9.8 9.4 4.3 %40.0 43.1 -7.2 %
Operating expenses (includes DAC unlocking and
amortization expense)
10.6 10.1 5.0 %41.9 40.4 3.7 %
Intangible asset amortization expense2.9 3.1 -6.5 %11.7 12.6 -7.1 %
Income before income taxes14.5 16.0 -9.4 %59.0 55.1 7.1 %
Net income / core earnings*11.5 12.5 -8.0 %46.3 43.1 7.4 %
Benefits ratio(1)
31.6 %29.5 %2.1  pts31.9 %33.0 %-1.1  pts
Operating expense ratio(2)
28.0 %26.2 %1.8  pts27.5 %26.7 %0.8  pts
Pretax profit margin(3)
38.4 %41.5 %-3.1  pts38.7 %36.4 %2.3  pts
Premium persistency (rolling 12 months)92.5 %90.5 %2.0  pts92.5 %90.5 %2.0  pts
N.M. - Not meaningful.
(1)    Ratio of benefits to earned premium.
(2)    Ratio of operating expenses to total revenues.
(3)    Ratio of income before taxes to total revenues.
10


HORACE MANN EDUCATORS CORPORATION
Business Segment Overview (Unaudited)

($ in millions)Three Months Ended
December 31,		Twelve Months Ended
December 31,
 20212020Change20212020Change
Retirement   
Net annuity contract deposits$104.2 $103.0 1.2 %$448.8 $429.1 4.6 %
Variable66.3 57.6 15.1 %266.5 226.2 17.8 %
Fixed37.9 45.4 -16.5 %182.3 202.9 -10.2 %
Contract charges earned10.8 8.2 31.7 %38.5 29.7 29.6 %
Net investment income42.7 37.9 12.7 %154.8 132.5 16.8 %
Interest credited14.1 14.2 -0.7 %56.2 58.6 -4.1 %
Net interest margin28.6 23.7 20.7 %98.6 73.9 33.4 %
Investment income - deposit asset on reinsurance26.0 25.2 3.2 %101.1 97.3 3.9 %
Interest credited - Reinsured block26.7 25.9 3.1 %104.6 100.9 3.7 %
Net interest margin - Reinsured block(0.7)(0.7)— %(3.5)(3.6)2.8 %
Other income5.1 4.2 21.4 %19.8 16.3 21.5 %
Mortality loss and other reserve changes(1.9)(1.2)-58.3 %(5.5)(5.3)-3.8 %
Operating expenses (includes DAC unlocking and
amortization expense)
23.1 20.6 12.1 %84.7 77.0 10.0 %
Intangible asset amortization expense0.3 0.4 -25.0 %1.3 1.8 -27.8 %
Other expense - goodwill and intangible asset impairments— 10.0 N.M.— 10.0 N.M.
Income before income taxes18.5 3.2 478.1 %61.9 22.2 178.8 %
Net income15.8 3.5 351.4 %52.0 20.1 158.7 %
Core earnings*15.8 11.6 36.2 %52.0 28.2 84.4 %
Pretax income increase (decrease) due to
evaluation of:
  
Deferred policy acquisition costs$(0.5)$0.5 N.M.$1.3 $1.8 -27.8 %
Guaranteed minimum death benefit reserve— 0.1 N.M.— 0.1 N.M.
Annuity contracts in force (thousands)230 230 — %
Retirement Advantage® contracts in force (thousands)
15 13 15.4 %
Annuity accumulated account value on deposit /
Assets under management
$5,339.8 $4,841.8 10.3 %
Variable(1)
2,606.4 2,139.3 21.8 %
Fixed2,733.4 2,702.5 1.1 %
Annuity accumulated value retention - 12 months
Variable accumulations94.4 %95.0 %-0.6  pts
Fixed accumulations94.3 %94.7 %-0.4  pts
Life   
Premiums written and contract deposits*$32.1 $30.8 4.2 %$116.9 $110.1 6.2 %
Premiums and contract charges earned15.7 32.2 -51.2 %108.4 120.2 -9.8 %
Net investment income22.6 20.4 10.8 %83.1 69.8 19.1 %
Other income— 0.1 -100.0 %0.3 0.2 50.0 %
Benefits20.0 36.4 -45.1 %127.9 134.6 -5.0 %
Operating expenses (includes DAC unlocking and
amortization expense)
11.7 11.6 0.9 %44.2 42.7 3.5 %
Income before income taxes6.6 4.7 40.4 %19.7 12.9 52.7 %
Net income / core earnings*5.3 3.6 47.2 %16.1 10.4 54.8 %
Pretax income increase (decrease) due to
evaluation of:
  
Deferred policy acquisition costs$0.2 $(0.2)N.M.$0.2 $0.3 -33.3 %
Life policies in force (in thousands)200 202 -1.0 %
Life insurance in force$20,440 $19,821 3.1 %
Lapse ratio - 12 months (Ordinary life insurance)3.5 %4.2 %-0.7  pts
N.M. - Not meaningful.
(1)    Amount reported as of December 31, 2021 excludes $834.6 million of assets under management held under modified coinsurance reinsurance.
11


HORACE MANN EDUCATORS CORPORATION
Business Segment Overview (Unaudited)

($ in millions)Three Months Ended
December 31,		Twelve Months Ended
December 31,
20212020% Change20212020% Change
Corporate & Other(1)
   
Components of income (loss) before tax:   
Net investment (losses) gains$(0.4)$10.5 N.M.$(11.0)$(2.3)N.M.
Interest expense(3.5)(3.5)— %(13.8)(14.8)6.8 %
Other operating expenses, net investment income
and other income
(4.2)(0.5)N.M.(11.1)(5.4)-105.6 %
Income (loss) before income taxes(8.1)6.5 N.M.(35.9)(22.5)-59.6 %
Net income (loss)(6.6)5.4 N.M.(28.6)(16.8)-70.2 %
Investments
Retirement and Life   
Fixed maturity securities, at fair value (amortized
cost, net 2021, $4,559.1; 2020, $4,458.1)
$4,915.4 $4,896.6 0.4 %
Equity securities, at fair value110.1 82.9 32.8 %
Short-term investments87.5 125.8 -30.4 %
Policy loans141.3 149.3 -5.4 %
Limited partnership interests492.9 276.6 78.2 %
Other investments45.8 51.5 -11.1 %
Total Retirement and Life investments5,793.0 5,582.7 3.8 %
Property & Casualty
Fixed maturity securities, at fair value (amortized
cost, net 2021, $663.5; 2020, $789.5)
723.8 867.2 -16.5 %
Equity securities, at fair value27.2 31.7 -14.2 %
Short-term investments52.1 6.8 N.M.
Limited partnership interests171.8 136.1 26.2 %
Other investments1.0 1.1 -9.1 %
Total Property & Casualty investments975.9 1,042.9 -6.4 %
Supplemental
Fixed maturity securities, at fair value (amortized
cost, net 2021, $575.1; 2020, $541.0)
600.1 581.5 3.2 %
Equity securities, at fair value8.9 6.0 48.3 %
Short-term investments17.2 6.4 168.8 %
Policy loans0.8 0.8 — %
Limited partnership interests48.1 36.3 32.5 %
Other investments3.5 1.8 94.4 %
Total Supplemental investments678.6 632.8 7.2 %
Corporate & Other
Equity securities, at fair value1.0 1.0 — %
Short-term investments1.0 2.8 -64.3 %
Total Corporate & Other investments2.0 3.8 -47.4 %
Total investments$7,449.5 $7,262.2 2.6 %
Net investment income - investment portfolio   
Before tax$88.1 $76.0 15.9 %$321.4 $260.3 23.5 %
After tax70.0 60.6 15.5 %255.8 207.7 23.2 %
Investment income - deposit asset on reinsurance
Before tax$26.0 25.2 3.2 %$101.1 97.3 3.9 %
After tax20.6 19.9 3.5 %79.9 76.9 3.9 %
N.M. - Not meaningful.
(1)    The Corporate & 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.
12