Horace Mann Educators Corporation · NYSE:HMN
Horace Mann Educators — Merger or Acquisition (December 2018)
20 slides from Horace Mann Educators's merger presentation, Dec 10, 2018
Slide 1: National Teachers Associates Transaction Overview
National Teachers Associates Transaction Overview December 10, 2018
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: Transaction summary
Transaction summary • Horace Mann to acquire 100% of National Teachers Associates Life Insurance Transaction Company (NTA) in an all-cash transaction • Purchase price of $405 million Deal Value • Transaction represents ~11x LTM 9/30/18 total core earnings adjusted for ~$75 million of their excess ca
Slide 4: NTA Strengthens Horace Mann's Presence in Education Market
NTA Strengthens Horace Mann’s Presence in Education Market
Slide 5: NTA acquisition strengthens Horace Mann's long-term strategy
NTA acquisition strengthens Horace Mann’s long-term strategy Longevity Financial Niche Multiline strength market model • Founded by Educators • $11B in assets(1) • Educators have • Revenues balanced between HORACE MANN for Educators® in 1945 • $1.2B in 2017 premium and preferred risk profile Propert
Slide 6: NTA products enhance Horace Mann's already strong solutions orientation
NTA products enhance Horace Mann’s already strong solutions orientation Retirement Preparing to retire Established educator New educator Issues: Issues: • How to manage Issues: • Worried about retirement • Protecting assets ensuring smooth income Pre-educator • Protecting retirement • Need to plan I
Slide 7: Acquisition deploys capital in high-margin business to accelerate household acquisitions and enhance ROE
Acquisition deploys capital in high-margin business to accelerate household acquisitions and enhance ROE Financially Attractive On the “PDI” Gameboard Products Delivers Immediate EPS and Return on Equity • Adds complementary supplemental insurance products designed to meet educators’ needs and cover
Slide 8: NTA provides supplemental insurance products to the education market
NTA provides supplemental insurance products to the education market NTA Financial Highlights (LTM 9/30/2018) • NTA’s product offerings include heart, cancer, accident and limited supplemental disability Premiums $132 million coverages Total revenues $156 million • Serving educator market for nearly
Slide 9: Compelling Opportunity to Leverage Business Strategy and Accelerate Profitable Growth
Compelling Opportunity to Leverage Business Strategy and Accelerate Profitable Growth
Slide 10: Expands solutions for education market
Expands solutions for education market • Brings together two mission-centric organizations focused on helping Reinforces Horace Mann’s educators achieve lifelong financial success Focus on Education Markets • Enhances scale in education market • Complementary supplemental insurance products designed
Slide 11: Adding NTA brings complementary products to meet educator financial needs
Adding NTA brings complementary products to meet educator financial needs Standalone Horace Mann Revenue Mix Pro Forma Horace Mann Revenue Mix $1.2 billion(1) $1.4 billion(1) Supplemental Supplemental Insurance Insurance 11% 11% Retirement 25% Retirement Property & 22% Property & Casualty Casualty L
Slide 12: Adding NTA offers diversification that reduces earnings volatility
Adding NTA offers diversification that reduces earnings volatility Standalone Horace Mann Core Pre-Tax Earnings Pro Forma Horace Mann Normalized Core Pre-Tax Earnings $127 million(1)(2) $173 million(1)(2) Property & Supplemental Casualty Property & Insurance 22% Casualty 27% 30% Retirement Life 52%
Slide 13: Combining distribution forces increases Horace Mann households and agent count by more than 30%
Combining distribution forces increases Horace Mann households and agent count by more than 30% Improved Scale in Target Markets Total household count of approximately 600,000 498,000 Vast majority of total customers are K-12 educators 138,000 Grows captive agent force to nearly 900 Improved
Slide 14: Offers long-term opportunity for household acquisitions and enhanced ROE
Offers long-term opportunity for household acquisitions and enhanced ROE Horace Mann has Strong Cross-Sell Expertise(1) Cross-selling Improves Horace Mann Persistency(3) • Educator customer cross-line penetration of 20% far • Horace Mann policy retention and persistency exceed exceeds industry avera
Slide 15: Compelling financial benefits
Compelling financial benefits • Adds $15-20 million to earnings and 100 basis points to ROE in Delivers EPS and ROE accretion first 12 months after closing • At closing, less than 1 percent dilutive to book value ex. AOCI Less Capital Intensive • Pro forma contribution expected to be about 10 percen
Slide 16: Financial Details
Financial Details
Slide 17: NTA background
NTA background Statutory Revenue Supplemental Insurance Premium Mix by Product(2) Other, 4% $151.2 $155.8 $143.1 $16.2 $18.4 $14.9 $millions Supplemental Cancer, disability Supplemental 31% disability, 24%24% $124.2 $130.1 $131.7 Accident, 17% Heart, 24% 2015 2016 2017 Premium Net investment income
Slide 18: Horace Mann liquidity and capitalization
Horace Mann liquidity and capitalization Ordinary Dividend Capacity (Operating Companies) Risk Based Capital Ratios(1) 615% $90.7 $90.1 $91.0 548% 569% 569% $84.6 482% 507% $82.1 465% 449% 459% 470% $millions 2013 2014 2015 2016 2017 2013 2014 2015 2016 2017 P&C RBC Life RBC Debt to Total Capitaliza
Slide 19: Reconciliation of standalone Horace Mann core pre-tax earnings LTM September 30, 2018
Reconciliation of standalone Horace Mann core pre-tax earnings LTM September 30, 2018 Normalized Core Earnings Core Earnings Corporate LTM LTM Core Earnings YTD Core Earnings LTM and Catastrophe Catastrophe LTM Segment 9/30/2018 Q4 2017 9/30/2018 Other Costs Guidance(1) 9/30/2018 Property and Casual
Slide 20: Contact
Contact Heather J. Wietzel Vice President, Investor Relations heather.wietzel@horacemann.com 217.788.5144 investors.horacemann.com
Horace Mann Educators — Merger or Acquisition (December 2018) on 6ix