8-K

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: November 2, 2020

HORACE MANN EDUCATORS CORPORATION

(Exact name of registrant as specified in its charter)

Delaware	1-10890	37-0911756
(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 class	Trading Symbol	Name of each exchange on which registered
Common Stock, $0.001 par value	HMN	New 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 (SEC) 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 November 2, 2020, the Company issued a news release reporting its financial results for the three and nine months ended September 30, 2020. A copy of the news release is attached as Exhibit 99.2 and is incorporated herein by reference.

 The Company’s Investor Supplement has been posted on the investors page of its website, investors.horacemann.com, and the Investor Presentation is anticipated to be posted there by November 3, 2020.

Item 9.01: Financial Statements and Exhibits

(d)Exhibits.

Exhibit 99.1    Glossary of Selected Terms.

Exhibit 99.2    News release dated November 2, 2020 reporting financial results for the three and nine months ended September 30, 2020.

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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: November 2, 2020

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EX-99.1

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 is meaningful to provide investors with an understanding of the significant factors that comprise the Company’s periodic results of operations and financial condition.

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.

Core earnings (loss) - Consolidated net income (loss) excluding the after-tax impact of net investment gains (losses), discontinued operations, goodwill impairment charges, 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.

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•Pretax core earnings (loss) - Pretax net income (loss) excluding pretax impact of net investment gains (losses), discontinued operations, goodwill impairment charges 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.

Exclusive distributor - A licensed representative of Horace Mann. Horace Mann utilizes multiple points of distribution, including, but not limited to, direct sales, employee agents and exclusive agents.

Insurance premiums written and contract deposits - Premiums written represent (1) the amount charged for policies issued during a fiscal period for property and casualty business, such amounts may be earned and included in financial results over future fiscal periods, and (2) the amount charged for policies in force during a fiscal period for traditional life and group life business. Amounts are reported net of reinsurance, unless otherwise specified. Contract deposits include amounts received from customers on deposit-type contracts, such as investment contracts (annuities) and life products with account values, including deposit amounts and any related contract or policy fees. Management utilizes this non-GAAP measure, which is based on statutory accounting principles, in analyzing and evaluating the business growth of its operating segments. Insurance premiums and contract charges earned is the most directly comparable GAAP measure.

Investment yield, excluding limited partnership interests, 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 net investment income from limited partnership interests 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.

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.

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•Net income return on equity - Annualized: The ratio of (1) annualized net income to (2) the 2 quarter average shareholders' equity (but the year-end measures are still based on a 5 quarter average).

•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 (but the year-end measures are still based on a 5 quarter average). 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.

Sales - Sales are measured by the Company as premiums and deposits to be collected over the 12 months following the sale of a new policy for automobile, homeowners, supplemental business and life business, as well as increases in contributions to certain life business. In addition, the Company may disclose new policy count (units) information for automobile and homeowners business. Sales data

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pertains to Horace Mann products and excludes authorized products sold by Exclusive Distributors that are underwritten by third-party vendors. The Retirement segment’s annuity contract deposits are measured by the Company based on total recurring deposits as well as single deposits/rollovers. 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.

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EX-99.2

Exhibit 99.2

News release for immediate release

Contact information:

Heather J. Wietzel

Vice President, Investor Relations

217-788-5144

investorrelations@horacemann.com

HORACE MANN REPORTS THIRD-QUARTER 2020 NET INCOME OF $0.87 PER SHARE AND CORE EARNINGS* OF $0.82 PER SHARE

•45.0% increase in net income and 28.1% increase in core earnings over prior-year period

◦Reflects benefits of multi-year strategic plan to improve products, distribution and infrastructure for education market

◦96.5% Property and Casualty combined ratio reflects continued lower-than-historic Auto frequency due to pandemic-related driving patterns and $8.7 million PG&E subrogation recovery offset by 21 points of catastrophe losses

•Book value per share up 9.1% and book value per share excluding net unrealized gains up 3.4% since year end 2019

•Raises full-year 2020 core earnings guidance to range of $2.95 to $3.15, with core ROE expected to be above 9%

◦Reflects expected increase in contribution from Supplemental segment and recognizes strong year-to-date results for Property and Casualty

◦Continues to reflect 13 to 14 point impact on combined ratio due to elevated 2020 catastrophe losses

SPRINGFIELD, Ill., November 2, 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 September 30,						Nine Months Ended September 30,
($ in millions, except per share amounts)	2020		2019		% Change		2020		2019		% Change
Total revenues	$	337.1	$	336.6	0.1	%	$	958.1	$	1,105.4	-13.3	%
Net income	36.5		25.4		43.7	%	85.5		151.4		-43.5	%
Net investment gains (losses) after tax	1.9		(1.6)		N.M.		(10.1)		118.9		N.M.
Goodwill impairment	—		—		—		—		(28.0)		N.M.
Core earnings*	34.6		27.0		28.1	%	95.6		60.5		58.0	%
Per diluted share:
Net income	0.87		0.60		45.0	%	2.03		3.61		-43.8	%
Net investment gains (losses) after tax	0.05		(0.04)		N.M.		(0.24)		2.84		N.M.
Goodwill impairment	—		—		—		—		(0.67)		N.M.
Core earnings per diluted share*	0.82		0.64		28.1	%	2.27		1.44		57.6	%
Book value per share							41.45		38.30		8.2	%
Book value per share excluding net unrealized investment gains on fixed maturity securities*							33.52		31.84		5.3	%

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

“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.”

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

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

	Three Months Ended September 30,								Nine Months Ended September 30,
($ in millions)	2020			2019			Change		2020			2019			Change
Property and Casualty written premiums*	$	172.8		$	182.5		-5.3	%	$	482.5		$	518.5		-6.9	%
Property and Casualty net income / core earnings*	15.8			14.2			11.3	%	53.7			34.3			56.6	%
Property and Casualty combined ratio	96.5		%	96.2		%	0.3	pts	93.5		%	98.5		%	-5.0	pts
Property and Casualty underlying loss ratio*	54.7		%	63.3		%	-8.6	pts	53.6		%	64.0		%	-10.4	pts
Property and Casualty expense ratio	25.2		%	26.4		%	-1.2	pts	25.8		%	26.7		%	-0.9	pts
Property and Casualty catastrophe losses	20.9		%	8.6		%	12.3	pts	16.0		%	9.3		%	6.7	pts
Property and Casualty underlying combined ratio*	79.9		%	89.7		%	-9.8	pts	79.4		%	90.7		%	-11.3	pts
Auto combined ratio	83.3		%	92.4		%	-9.1	pts	85.3		%	97.0		%	-11.7	pts
Auto underlying loss ratio*	56.8		%	66.7		%	-9.9	pts	58.1		%	70.2		%	-12.1	pts
Property combined ratio	121.7		%	104.3		%	17.4	pts	109.6		%	102.0		%	7.6	pts
Property underlying loss ratio*	50.8		%	55.6		%	-4.8	pts	44.9		%	50.6		%	-5.7	pts

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.

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Supplemental Segment Contributes $10.6 Millionto 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 September 30,								Nine Months Ended September 30,
($ in millions)	2020			2019			Change		2020			2019			Change
Supplemental sales*	$	1.4		$	3.6		-61.1	%	$	5.8		$	3.6		N/A
Earned premiums	32.5			32.9			-1.2	%	98.8			32.9			N/A
Supplemental net income / core earnings*	10.6			6.9			53.6	%	30.6			6.9			N/A
Pretax profit margin (1)	36.3		%	23.7		%	12.6	pts	34.7		%	23.7		%	N/A

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 September 30,						Nine Months Ended September 30,
($ in millions)	2020		2019		Change		2020		2019		Change
Annuity contract deposits*	$	137.2	$	128.3	6.9	%	$	366.7	$	344.6	6.4	%
Annuity assets under management (1)							4,508.7		4,215.9		6.9	%
Total assets under administration (2)							8,032.6		7,897.7		1.7	%
Retirement net income (loss)	7.8		5.9		32.2	%	16.6		(6.9)		N.M.
Retirement core earnings*	7.8		5.9		32.2	%	16.6		21.1		-21.3	%
Retirement core earnings excluding DAC unlocking*	7.3		5.9		23.7	%	15.6		23.9		-34.7	%

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.

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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 September 30,						Nine Months Ended 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 earnings*	4.3		5.1		-15.7	%	6.8		13.6		-50.0	%

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 September 30,								Nine Months Ended September 30,
($ in millions)	2020			2019			Change		2020			2019			Change
Pretax net investment income - investment portfolio	$	69.2		$	69.2		—	%	$	184.3		$	232.3		-20.7	%
Pretax investment income - deposit asset on reinsurance	24.5			23.8			2.9	%	72.1			47.0			53.4	%
Total pretax net investment income	93.7			93.0			0.8	%	256.4			279.3			-8.2	%
Pretax net investment gains (losses)	2.5			(2.1)			N.M.		(12.8)			151.6			N.M.
Pretax net unrealized investment gains (losses) on fixed maturity securities									496.2			386.1			28.5	%
Investment yield, excluding limited partnership interests, pretax - annualized	4.18		%	4.62		%	-0.44	pts	4.36		%	4.73		%	-0.37	pts

N.M. - Not meaningful.

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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® 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.

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6

HORACE MANN EDUCATORS CORPORATION

Financial Highlights (Unaudited)

($ in Millions, except per share data)

	Three Months Ended September 30,								Nine Months Ended September 30,
	2020			2019			% Change		2020			2019			% Change
EARNINGS SUMMARY
Net income	$	36.5		$	25.4		43.7	%	$	85.5		$	151.4		-43.5	%
Net investment gains (losses), after tax	1.9			(1.6)			N.M.		(10.1)			118.9			N.M.
Other expense - goodwill impairment	—			—			—		—			(28.0)			N.M.
Core earnings*	34.6			27.0			28.1	%	95.6			60.5			58.0	%
Per diluted share:
Net income	$	0.87		$	0.60		45.0	%	$	2.03		$	3.61		-43.8	%
Net investment gains (losses), after tax	$	0.05		$	(0.04)		N.M.		$	(0.24)		$	2.84		N.M.
Other expense - goodwill impairment	$	—		$	—		—		$	—		$	(0.67)		N.M.
Core earnings*	$	0.82		$	0.64		28.1	%	$	2.27		$	1.44		57.6	%
Weighted average number of shares and equivalent shares (in millions) - Diluted	42.1			42.0			0.2	%	42.0			41.9			0.2	%
RETURN ON EQUITY
Net income return on equity - LTM (1)	7.4		%	9.2		%			7.4		%	9.2		%
Net income return on equity - annualized	8.7		%	6.6		%			6.9		%	14.1		%
Core return on equity - LTM* (2)	9.4		%	4.1		%			9.4		%	4.1		%
Core return on equity - annualized*	10.1		%	8.3		%			9.4		%	6.4		%
FINANCIAL POSITION
Per share: (3)
Book value									$	41.45		$	38.30		8.2	%
Effect of net unrealized investment gains on fixed maturity securities (4)									$	7.93		$	6.46		22.8	%
Dividends paid	$	0.30		$	0.2875		4.3	%	$	0.90		$	0.8625		4.3	%
Ending number of shares outstanding (in millions) (3)									41.4			41.2			0.5	%
Total assets									$	13,003.4		$	12,332.5		5.4	%
Short-term debt									135.0			135.0			—	%
Long-term debt									302.2			298.0			1.4	%
Total shareholders’ equity									1,715.7			1,578.6			8.7	%
ADDITIONAL INFORMATION
Net investment 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, diluted	$	0.05		$	(0.04)		N.M.		$	(0.24)		$	2.84		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 41,396,322 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.

7

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	%

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.

8

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

N.M. - Not meaningful.

(1)    Includes assumed risks in force of 4.

9

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

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.

10

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

N.M. - Not meaningful.

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

11

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.

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.

12

XML

Cover Page	Nov. 02, 2020
Cover [Abstract]
Document Type	8-K
Document Period End Date	Nov. 02, 2020
Entity Registrant Name	HORACE MANN EDUCATORS CORPORATION
Entity Incorporation, State or Country Code	DE
Entity File Number	1-10890
Entity Tax Identification Number	37-0911756
Entity Address, Address Line One	1 Horace Mann Plaza
Entity Address, City or Town	Springfield
Entity Address, State or Province	IL
Entity Address, Postal Zip Code	62715‑0001
City Area Code	217
Local Phone Number	789‑2500
Written Communications	false
Soliciting Material	false
Pre-commencement Tender Offer	false
Pre-commencement Issuer Tender Offer	false
Title of 12(b) Security	Common Stock, $0.001 par value
Trading Symbol	HMN
Security Exchange Name	NYSE
Entity Emerging Growth Company	false
Entity Central Index Key	0000850141
Amendment Flag	false