Slide 1: Second Quarter 2022 Investor Presentation
Second Quarter 2022 Investor Presentation August 4, 2022 Information as June 30, 2022, unless otherwise noted
Slide 2: Safe Harbor Statement and Non-GAAP Measures
Safe Harbor Statement and Non-GAAP Measures Certain statements made in this presentation should be considered forward-looking as defined in the Private Securities Litigation Reform Act of 1995. Forward-looking statements give expectations or forecasts of future events. These statements are related t
Slide 3: Our Foundation: Financially sound company with strong strategy for profitable growth
Our Foundation: Financially sound company with strong strategy for profitable growth Financial Niche Multiline Longevity strength market model • 1945: Founded by Educators for • $14.4B in assets(1) • Educators have preferred • Business mix balanced Educators to sell auto insurance • $1.3B in net pre
Slide 4: Driven by a noble mission
Driven by a noble mission Mission We listen to and understand educators and those who serve our community. They are taking care of our children’s future. We believe they deserve someone to look after theirs. Vision We aspire to be the company of choice to provide financial solutions for all educator
Slide 5: Commitment to making a positive impact extends to all stakeholders
Commitment to making a positive impact extends to all stakeholders Our ESG commitment is ingrained in long-term strategy and day-to-day operations We are committed to doing • Committed to cutting absolute Scope 1 and Scope 2 carbon emissions in our part to protect the half by 2030 and achieve net-ze
Slide 6: Strategic emphasis on solutions tailored for educators at every life stage
Strategic emphasis on solutions tailored for educators at every life stage Retirement Preparing to retire Established educator New Issues: • How to manage educator Issues: retirement income • Worried about Issues: ensuring smooth • Need to plan wealth Pre-educator • Protecting assets retirement tran
Slide 7: Value proposition for educator customers delivered through focus on "PDI"
Value proposition for educator customers delivered through focus on “PDI” Provided roadmap for fix-and-build and transformational stages Serving K-12 Educator Market Focused on “PDI” Products Homogenous customer set with attractive • Products designed to meet educators’ needs risk profiles and prote
Slide 8: Addition of worksite solutions caps multi-year transformation
Addition of worksite solutions caps multi-year transformation Successfully navigating pandemic environment LEVERAGE LEADERSHIP: 2022 AND BEYOND Horace Mann TRANSFORMATION: 2019-2021 enters 2022 Initiated pre-pandemic prepared for • Improved key levers of underlying profitability leadership improveme
Slide 9: Leverage leadership stage: Targeting growth across all product lines
Leverage leadership stage: Targeting growth across all product lines Strategies to leverage leadership focus on initiatives to maximize profitable growth and gain market share LEVERAGE LEADERSHIP: 2022 AND BEYOND Maximize worksite Cross-sell educators Leverage Auto opportunity Continue incenting exc
Slide 10: Earnings trajectory illustrates clear path to sustainable double-digit ROE
Earnings trajectory illustrates clear path to sustainable double-digit ROE through profitable growth 2022 EPS guidance updated to Results include a net 40 cents of $2.15 - $2.35 above-historical average returns on limited partnership portfolio offset Reflects impact of external events Core EPS by ca
Slide 11: Prioritizing shareholder value creation; $24 million of repurchase activity in 2022
Prioritizing shareholder value creation; $24 million of repurchase activity in 2022(1) Approximately $50 million in annual excess capital generating capacity available to support growth and to return to shareholders; new repurchase authorization added in May 2022 9% CAGR $48.14 $47.24 $43.74 $40.58
Slide 12: 2022 EPS guidance now $2.15-$2.35
2022 EPS guidance now $2.15-$2.35 Reflects higher-than-historic average catastrophe activity, equity market declines and impact of inflation and other factors on auto loss severity Segment / Current Considerations update guidance • Continuing to target 10% average annual Property & Casualty Catastro
Slide 13: Education market
Education market
Slide 14: Sizeable, growing opportunity in core K-12 education market
Sizeable, growing opportunity in core K-12 education market Additional opportunities to grow in legacy adjacent markets U.S. elementary and secondary education teachers, projected(1) • 7.5 million K-12 educators nationwide(1) - ~3.7M teachers in public and private schools; ~3.1M public school instru
Slide 15: K-12 education a homogeneous market with similar customer characteristics and goals
K-12 education a homogeneous market with similar customer characteristics and goals Reachable through both retail and worksite channels Desire to Responsible, Conservative Dedicated to improve risk-adverse educator total & loyal students and loyal compensation • Strong desire for • Passion for educa
Slide 16: Expanded product set aligns with educator needs throughout life stages
Expanded product set aligns with educator needs throughout life stages Retirement Preparing to retire Established educator New educator Pre-educator Renters insurance Auto insurance Employer-sponsored life, disability and supplemental health insurance 403(b) retirement plan Home insurance Voluntary
Slide 17: Uniquely positioned to take advantage of education market opportunities
Uniquely positioned to take advantage of education market opportunities Retail customers: Natural cross-sell: Our individual retail customers plus P&C and L&R voluntary/supplemental customers and SLS users are a natural cross-sell (including third-party) universe for our retail products Revenue-gene
Slide 18: Tapping the opportunity
Tapping the opportunity
Slide 19: Leverage leadership stage: Targeting growth across all product lines
Leverage leadership stage: Targeting growth across all product lines Strategies to leverage leadership focus on initiatives to maximize profitable growth and gain market share LEVERAGE LEADERSHIP: 2022 AND BEYOND Maximize worksite Cross-sell educators Leverage Auto opportunity Continue incenting exc
Slide 20: Relevance for educators grows with expanded worksite capabilities
Relevance for educators grows with expanded worksite capabilities Helping educators protect what they have today and prepare for a successful tomorrow Retail solutions Worksite solutions • Solutions directly selected by • Solutions offered to educators an educator, often working with via their distr
Slide 21: Enables customers to engage with Horace Mann the way they choose
Enables customers to engage with Horace Mann the way they choose “Horace Mann Companies” brings together three organizations with decades of commitment to educators and strong reputations in the market Purchase Purchase through from local, employer- trusted agent sponsored program Worksite Educators
Slide 22: Complementary footprints create significant cross-sell opportunities between worksite product lines
Complementary footprints create significant cross- sell opportunities between worksite product lines Over time, cross sell with districts reached by retail businesses presents additional upside Voluntary supplemental (NTA) 2021 premiums(1) Employer-sponsored (MNL), 2021 premiums(1) Property & Casual
Slide 23: Business details and results
Business details and results
Slide 24: Q2 earnings impacted by catastrophe losses, effects of inflation and equity market declines
Q2 earnings impacted by catastrophe losses, effects of inflation and equity market declines Sales momentum continues; expect 2023 core ROE in high-single digits as trajectory toward sustainable double-digit ROE resumes Total revenues • Second-quarter net loss of $0.30 per share and core loss* of $0.
Slide 25: P&C segment: Providing coverage to protect what educators have today
P&C segment: Providing coverage to protect what educators have today Horace Mann 2021 net premiums written and contract deposits* in millions Products • Auto, homeowners, renters and umbrella • Majority of P&C business is bundled auto and home • Partnerships through Horace Mann General Agency Life &
Slide 26: P&C segment: Results reflect catastrophe losses, inflationary pressure
P&C segment: Results reflect catastrophe losses, inflationary pressure Net Premiums Written* Q2 results $663 $682 $683 $636 $608 $608 • Segment core loss reflected previously announced catastrophe losses as well as millions impact of inflation on auto results - Catastrophe losses were $45.7 million
Slide 27: Life & Retirement: Helping educators and their families plan for a strong financial future
Life & Retirement: Helping educators and their families plan for a strong financial future Horace Mann 2021 net premiums written and contract deposits Products in millions • 403(b) tax-qualified fixed, fixed index and variable annuities • Horace Mann Retirement Advantage® open architecture platform
Slide 28: Life & Retirement: Segment earnings up on strong net investment income
Life & Retirement: Segment earnings up on strong net investment income Net annuity contract deposits* Q2 results • Segment core earnings up 5% with total $447 $439 $449 $442 $419 $429 benefits and expenses largely unchanged - Adjusted core earnings, which excludes DAC millions unlocking, were up 24%
Slide 29: Supplemental & Group Benefits segment: Providing options to address unexpected events
Supplemental & Group Benefits segment: Providing options to address unexpected events Horace Mann 2021 net premiums written Products and contract deposits in millions • Individual limited benefit products that are guaranteed renewable and portable - Products include Cancer, Heart, Hospital and Accid
Slide 30: Supplemental & Group Benefits: Includes results of new employer-sponsored product line
Supplemental & Group Benefits: Includes results of new employer-sponsored product line Sales* $3.7 $3.5 Q2 results 1.3 $2.0 $2.2 $2.3 millions • Segment core earnings up 10% $1.0 $1.2 $2.0 $2.2 $2.2 • Voluntary product sales up 83% over prior $1.4 $1.0 $1.2 year; employer-sponsored product sales in
Slide 31: Investments: High-quality, well-diversified portfolio
Investments: High-quality, well-diversified portfolio Constructed to support insurance liabilities through various market cycles Portfolio composition(1) • $5.7 billion fixed-maturity portfolio $6.8 billion fair value • 67% A-rated or higher Short-term U.S. Treasury 1% & Agency • A+ weighted-average
Slide 32: $446M Commercial Mortgage Loan Fund Portfolio
$446M Commercial Mortgage Loan Fund Portfolio Diversified pool of high-quality loans Loans by Property Type 1% 4% Office • Majority of exposure is to open-ended 12% funds comprised of senior loans Multi-Family 5% 31% • Fund structure and diversification of Retail managers provide access to broader I
Slide 33: $382M Limited Partnership Fund Portfolio
$382M Limited Partnership Fund Portfolio Well diversified by strategy, vintage year, and potential volatility of returns Limited Partnership Funds by Strategy 3% Infrastructure Debt • 8.57% average annual return with Private Equity relatively low volatility of returns 6% 18% Infrastructure Equity 7%
Slide 34: Strong capital position, with more than adequate capital to grow businesses
Strong capital position, with more than adequate capital to grow businesses Capital Ratios • Capital management strategies support strong capital ratios 600% 569% 0.0 - P&C loss reserves held at top half of independent actuarial range 507% 536% - Conservative L&R product design 500% 0.5 - Supplement
Slide 35: Appendix
Appendix
Slide 36: Highly rated by all rating agencies
Highly rated by all rating agencies Education market focus, earnings diversification and capital strength cited Agency Rating Outlook (affirmed/reviewed) • AM Best upgraded the Financial Strength Rating of subsidiary NTA Life to AM Best A Stable A (Excellent) in recent rating action and Company (7/2
Slide 37: 2022 single-event catastrophe reinsurance provides PML coverage of approximately 400+ years
2022 single-event catastrophe reinsurance provides PML coverage of approximately 400+ years Casualty Property(1) $20M ~400+ yrs $175M THIRD LAYER 2nd LAYER CASUALTY $85M xs $90M CLASH & CONTINGENCY $10M xs $10M $90M SECOND LAYER $10M $40M xs $50M 1st LAYER CASUALTY CLASH & CONTINGENCY $50M $5M xs $5
Slide 38: Extract from Note 1 of 10-Q: Future adoption of new accounting standards
Extract from Note 1 of 10-Q for period ended June 30, 2022, to be filed with Securities and Exchange Commission Future adoption of new accounting standards: Accounting for long-duration insurance contracts 38
Slide 39: Horace Mann at a glance
Horace Mann at a glance Exchange ticker symbol NYSE:HMN Share Price $34.25(1) Weighted Average Diluted Shares (for 2Q22) 41.8 million Market Capitalization $1.4 billion(1) Annualized Dividend Per Share $1.28 Dividend Yield Per Share 3.7%(1) Book Value Per Share* $35.94(2) Analyst Coverage Dowling &