Slide 1: Third Quarter 2024 Investor Presentation
Third Quarter 2024 Investor Presentation November 4, 2024 Information as of September 30, 2024, unless otherwise noted
Slide 2: Safe Harbor Statement and Non-GAAP Measures
Safe Harbor Statement and Non-GAAP Measures Certain statements included in this presentation, including those regarding our earnings outlook, expected catastrophe losses, our investment strategies, our plans to implement additional rate actions, our plans relating to share repurchases and dividends,
Slide 3: Reported third-quarter 2024 core EPS of $0.76; full-year guidance unchanged
Reported third-quarter 2024 core EPS of $0.76; full-year 2024 core EPS guidance unchanged at $2.40-$2.70 Third-quarter 2024 results significantly improved over the prior year reflecting strong underlying P&C results, as well as the continued strength of our diversified business model Full-year core
Slide 4: On track to reach sustainable double-digit ROE by 2025
On track to reach sustainable double-digit ROE by 2025 Full-year 2024 core EPS guidance unchanged at $2.40 to $2.70 Diversified business well positioned for 2024 and beyond 2024 enterprise strategic priorities • Retail: • Restore Property & Casualty segment - Property & Casualty segment profit resto
Slide 5: 2024 full-year guidance unchanged from mid-year expectation
2024 full-year guidance unchanged from mid- year expectation 2024 core EPS expected to be in the range of $2.40 to $2.70 (or core earnings of $100 million to $112 million) • Committed to sustainable double-digit ROE in 2025 and beyond • Outlook for consolidated results includes: - 8% to 9% increase
Slide 6: 2024 segment outlooks demonstrate value of business diversification
2024 segment outlooks demonstrate value of business diversification • Life & Retirement segment core earnings • Property & Casualty segment core of $50 million to $56 million to reflect lower- earnings between $36 million and $39 than-expected net investment income in million the first half of 2024
Slide 7: Benefits of auto rate and other underwriting actions on track to target
Benefits of auto rate and other underwriting actions on track to target Profit restoration actions largely complete Minimum cumulative countrywide impact of actual and planned filed • Fourth-quarter 2024 rate actions will rate increases(1) ~40% achieve rate adequacy in aggregate Q4 across the countr
Slide 8: Property results to benefit from multi-faceted approach; on track to target
Property results to benefit from multi- faceted approach; on track to target Addressing more frequent and severe weather activity through additional filed rate, product changes and enhanced modeling Minimum cumulative countrywide • Cumulative rate impact since the beginning of impact of actual and p
Slide 9: Business details and results
Business details and results
Slide 10: P&C segment: Providing coverage to protect what educators have today
P&C segment: Providing coverage to protect what educators have today Horace Mann 2023 revenues(1) Products • Auto, homeowners, renters and umbrella • Majority of P&C business is bundled auto Supplemental and home & Group Benefits • Third-party appointments through Horace 19% Mann General Agency Prop
Slide 11: P&C segment: Remains on track to full-year profitability
P&C segment: Remains on track to full-year profitability; third-quarter results reflect strong underlying improvement Net Premiums Written* • Third-quarter segment core earnings of $760 $684 $10.6 million reflects strong underlying $636 $608 $618 improvement and favorable prior years’ reserve develo
Slide 12: Life & Retirement: Helping educators plan for a strong financial future
Life & Retirement: Helping educators and their families plan for a strong financial future Horace Mann 2023 revenues(1) Products • 403(b) tax-qualified fixed, fixed index and variable annuities Supplemental • Horace Mann Retirement Advantage® open & Group architecture platform for 403(b)(7) and Bene
Slide 13: Life & Retirement: Stable results with strong Life annualized sales
Life & Retirement: Stable results with strong Life annualized sales Net annuity contract deposits* • Third-quarter segment core earnings of $14.8 million reflected: $449 $456 $442 $429 $429 - Segment net investment income of $94.6 million, slightly below the prior year millions - Net spread on fixed
Slide 14: Supplemental & Group Benefits segment: Providing options to address unexpected events
Supplemental & Group Benefits segment: Providing options to address unexpected events Horace Mann 2023 revenues(1) Products • Individual supplemental products that are guaranteed renewable and portable Supplemental - Products include cancer, heart, hospital and accident as & Group well as short-term
Slide 15: Supplemental & Group Benefits: Solid third-quarter results
Supplemental & Group Benefits: Solid third- quarter results Net premiums and contract charges earned $275.4 $259.8 $255.2 $44.6 $24.6 $16.1 • Third-quarter segment core earnings of $14.8 million reflected: millions $109.6 $114.9 $118.1 $130.7 $125.3 - Net investment income $10.1 million, slightly be
Slide 16: High-quality, well-diversified investment portfolio
High-quality, well-diversified investment portfolio Constructed to support insurance liabilities through various market cycles Portfolio composition(1) $6.9 billion fair value • $5.6 billion fixed-maturity portfolio Short-term 1% Equities Mortgage Loans • 73% A-rated or higher 1% 1% • A+ weighted-av
Slide 17: $600M Commercial Mortgage Loan Funds continue to produce strong cash returns
$600M Commercial Mortgage Loan Funds continue to produce strong cash returns Equity method of accounting requires changes in fair value to be reported in net investment income CML NII vs. Distribution Yield3 Analysis • CML funds are held in L&R and S&GB 10% 8.80% $60 segments; no allocation in P&C,
Slide 18: Commercial Mortgage Loan Fund portfolio characteristics
Commercial Mortgage Loan Fund portfolio characteristics Well diversified by underlying property type, geography and maturity profile By Property Type 6% Multi-family • Underlying loan characteristics 5% Office • 255 loans, average size of ~$49M 14% Industrial • Average loan-to-value of 79% 52% Hotel
Slide 19: $487M Limited Partnership Fund Portfolio
$487M Limited Partnership Fund Portfolio Well diversified by strategy(1), vintage year and potential volatility of returns 5% 3% 17% Corporate Mezz • Inception-to-date performance strong 15% Infrastructure Debt • Average annual return of 9.0% Infrastructure Equity • Resilient portfolio benefits from
Slide 20: Financial leverage and other capital metrics align with ratings
Financial leverage and other capital metrics align with levels appropriate for current financial strength ratings Capital Ratios 500% 477% 0.0 • More than adequate 459% capital to continue 445% 438% to grow business 439% 0.5 • Conservative Premium / Surplus Ratio 432% 420% 421% 400% 386% targets for
Slide 21: About Horace Mann
About Horace Mann
Slide 22: 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 • $14.0B in assets(1) • Educators have preferred • Business mix balanced Educators to sell auto insurance • $1.5B in net pre
Slide 23: 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 24: Strategic emphasis on solutions tailored for educators at every life stage
Strategic emphasis on solutions tailored for educators and others who serve the community at every life stage Retirement Preparing to retire Established Career Early Issues: Career • How to manage Issues: • Worried about retirement income Issues: ensuring smooth • Need to plan wealth Pre-career • Pr
Slide 25: 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; 3,874 3,907 ~3.1M public s
Slide 26: K-12 education a homogeneous market with similar customer characteristics
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 27: Delivering value proposition for educator customers
Delivering value proposition for educator customers Focus on Retail ‘PDI’ provided roadmap for fix-and-build and transformational stages Serving K-12 Educator Market Focused on Retail “PDI” Products Homogenous customer set with attractive • Products designed to meet educators’ needs risk profiles an
Slide 28: Increased relevance for educators
Increased relevance for educators 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 district employer a trusted financial
Slide 29: Worksite: Expanded distribution allows educators to engage their way
Expanded distribution allows educators 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 progr
Slide 30: Positioned with significant cross-sell opportunities
Positioned with significant cross-sell opportunities Worksite direct (NTA) 2023 premiums(1) Employer-sponsored (MNL) 2023 premiums(1) Property & Casualty 2023 premiums(1) Life & Retirement 2023 premiums(1) 30 (1) 2023 Statutory Schedule T
Slide 31: Driving shareholder value growth through business diversification and cross-sell
Driving shareholder value growth through business diversification and cross-sell K-12 educator market offers substantial growth potential with additional opportunities in adjacent markets of others who serve the community Market share has climbed to • Business diversification expands customer approx
Slide 32: Transformation has driven strong shareholder value creation
Transformation has driven strong shareholder value creation 7.2% compound annual growth in adjusted book value plus accumulated dividends since 2010 $51.46 $48.63 $49.84 $48.12 $44.09 $40.93 $35.73 $36.49 $32.91 $30.92 $28.44 • 16 consecutive years of dividend increases with current yield of 3.7%(1)
Slide 33: PDI implementation in leadership phase to drive shareholder value creation
PDI implementation in leadership phase to drive strong shareholder value creation Focus in 2024 and beyond is distribution initiatives to drive market share expansion Product: Complete Infrastructure: Ongoing • We have built a robust set of products, relevant to our Distribution: Focus market niche
Slide 34: Stage set for accelerated shareholder value creation as market share expands
Stage set for accelerated shareholder value creation as market share expands Largest financial services company focused on meeting the needs of educators and others who serve our communities $1,250 Net Premiums and Contract Charges Earned (in millions) $1,000 20% 15% $750 $500 School access 65% limi
Slide 35: Earnings trajectory illustrates clear path to sustainable double-digit ROE
Earnings trajectory illustrates clear path to sustainable double-digit ROE through profitable growth Core EPS* Below long-term trendline as severe $4.24 Sustained weather, inflation and financial market volatility double- $3.40 offset benefits of digit ROE education market focus, sales momentum and
Slide 36: Appendix
Appendix
Slide 37: 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) • Fitch revised the P&C outlook to stable and affirmed Horace Mann’s financial strength ratings in August 2024 AM Best A Stable • AM Best affirmed
Slide 38: 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 • Published inaugural Task Force on Climate-Related Disclosures (TCFD) We are committed to doing report in 2023, detailing our awareness and maintenance
Slide 39: 2024 single-event catastrophe reinsurance provides PML coverage
2024 single-event catastrophe reinsurance provides PML coverage of approximately 400+ years Casualty Property(1) $20M $185M ~400+ yrs 3rd LAYER 2nd LAYER CASUALTY $90M xs $95M CLASH & CONTINGENCY 92% Placed $10M xs $10M $95M $10M 2nd LAYER $35M xs $60M 1st LAYER CASUALTY 90% Placed CLASH & CONTINGEN
Slide 40: Horace Mann at a glance
Horace Mann at a glance Exchange ticker symbol NYSE:HMN Share Price $37.24(1) Weighted Average Diluted Shares (for 3Q24) 41.4 million Market Capitalization $1.5 billion(1) Annualized Dividend Per Share $1.36 Dividend Yield Per Share 3.7%(1) Adjusted Book Value Per Share (at September 30, 2024) $36.8