Slide 1: First Quarter 2022 Investor Presentation
First Quarter 2022 Investor Presentation May 5, 2022 Information as March 31, 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 in 2022 and beyond 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 Con
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 at lower end of $3.45 - $3.65 guidance range 2022 will include at least 15 cents from newly acquired Madison National Life’s current business activity, as well as initial contributions of th
Slide 11: Expectation for 2022 EPS at lower end of guidance range
Expectation for 2022 EPS at lower end of $3.45-$3.65 guidance range Reflects impact of inflation on nearer-term auto results as well as the potential impact of market volatility on DAC unlocking Segment Key considerations • Continuing to target 10% average annual Property & • Catastrophe loss ratio
Slide 12: Allocation of excess capital to prioritize shareholder value creation
Allocation of excess capital to prioritize shareholder value creation As a larger and more diverse organization, Horace Mann should generate more than $50 million in excess capital each year, available to support growth and to return to shareholders 9% CAGR $48.53 $47.24 $43.74 $40.58 $35.38 $36.14
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 in 2022 and beyond 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 Con
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: Worksite: 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
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: Q1 results impacted by effects of inflation on Property & Casualty segment
Q1 results impacted by effects of inflation on Property & Casualty segment Steady earnings in Life & Retirement and Supplemental & Group Benefits segments Core EPS • Property & Casualty segment earnings declined over prior year - Comparison unfavorable due to pandemic-related low level of auto loss
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 inflationary pressures on auto loss costs
P&C segment: Results reflect inflationary pressures on auto loss costs Net Premiums Written Q1 results $663 $682 $683 $636 $608 $606 • Core earnings primarily reflected anticipated increase in auto loss frequency toward pre- millions pandemic levels and higher auto loss severity due to inflation - P
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 benefits from continued growth in net annuity contract deposits
Life & Retirement: Segment benefits from continued growth in net annuity contract deposits Net annuity contract deposits* Q1 results $447 $449 $455 • Core earnings were 3.5% higher, with total $439 $429 $419 benefits and expenses unchanged - Adjusted core earnings, which excludes DAC unlocking milli
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 Q1 results $2.2 $2.0 $2.3 • Core earnings down slightly, partially due to millions $1.0 $1.2 non-cash impact of amortization of $2.0 $2.2 intangible assets under purchase accounting $1.2 $1.4 $1.0 • Vol
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) • $6.0 billion fixed-maturity portfolio $7.1 billion fair value • 65% A-rated or higher Short-term • A+ weighted-average credit quality Non- 2% U.
Slide 32: $429M Commercial Mortgage Loan Fund Portfolio
$429M Commercial Mortgage Loan Fund Portfolio Diversified pool of high-quality loans Loans by Property Type 1% 4% 4% Office • Majority of exposure is to open-ended Multi-Family funds comprised of senior loans 7% 7% 31% Retail • Fund structure and diversification of Industrial managers provide access
Slide 33: $373M Limited Partnership Fund Portfolio
$373M Limited Partnership Fund Portfolio Well diversified by strategy, vintage year, and potential volatility of returns Limited Partnership Funds by Strategy 5% 8% Hedge Funds • 8.57% average annual return with 5% IG Infrastructure Debt relatively low volatility of returns 7% Infrastructure Equity
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 management strategies Capital Ratios support strong capital ratios 600% 0.0 569% - P&C loss reserves held at top half of independent actuarial range - Conservative L&R product design 507% 536% 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 (7/1
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: Horace Mann at a glance
Horace Mann at a glance Exchange ticker symbol NYSE:HMN Share Price $39.85(1) Weighted Average Diluted Shares (for 1Q22) 42.1 million Market Capitalization $1.7 billion(1) Annualized Dividend Per Share $1.28 Dividend Yield Per Share 3.2%(1) Book Value Per Share* $36.65(2) Analyst Coverage Dowling &