Slide 1: Full-year 2022 Investor Presentation
Full-year 2022 Investor Presentation Feb. 7, 2023 Information as December 31, 2022, 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: 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 • $13.4B in assets(1) • Educators have preferred • Business mix balanced Educators to sell auto insurance • $1.4B 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: Delivering value proposition for educator customers
Delivering value proposition for educator customers 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 protect thei
Slide 8: Addition of worksite solutions capped steps taken to implement 'PDI'
Addition of worksite solutions capped steps taken to implement ‘PDI’ Completed key steps while successfully navigating pandemic environment LEVERAGE LEADERSHIP: 2022 AND BEYOND Horace Mann TRANSFORMATION: 2019-2021 entered 2022 Initiated pre-pandemic prepared for • Improved key levers of underlying
Slide 9: PDI implementation in leadership phase to drive strong shareholder value creation
PDI implementation in leadership phase to drive strong shareholder value creation Focus in 2023 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 educator mark
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 Core EPS* Below long-term trendline as inflationary trends and financial market volatility Long- offset benefits of education term market focus, sales objective: momentum and business 10% diversifica
Slide 11: Prioritizing shareholder value creation; $24 million of repurchase activity in 2022
Prioritizing shareholder value creation; $24 million of repurchase activity in 2022 New repurchase authorization added in May 2022; 68,550 shares repurchased in early 2023 8.0% CAGR $47.24 $47.21 $43.74 $40.58 $35.38 $36.14 $32.56 $30.57 $28.09 $25.62 $22.94 $20.25 • 14 consecutive years of dividend
Slide 12: Profitable growth to drive return to double-digit ROE in 2024
Profitable growth to drive return to double-digit ROE in 2024 with core EPS approaching $4 2023 core EPS will be in the range of $2.00 to $2.30 (or core earnings of $84 million to $96 million), with core ROE near 6% • Continuing to target long-term 10% average annual EPS growth and sustained double-
Slide 13: Segment outlook reflects value of business diversification
Segment outlook reflects value of business diversification • Life & Retirement segment core earnings • Property & Casualty segment core earnings between $67 million to $70 million in 2023, between $5 million to $10 million in 2023 will taking into account adoption of LDTI effective reflect the growi
Slide 14: Anticipating auto combined ratio between 97% and 98% in 2024
Anticipating auto combined ratio between 97% and 98% in 2024 Building on rate actions of 5.4% in 2022 with plans for rate increases in the range of 18% to 20% over the next four quarters Minimum cumulative countrywide impact of actual and planned filed rate increases(1) 23% • 2023 Auto combined rati
Slide 15: Education market opportunity
Education market opportunity
Slide 16: 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 17: 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 18: 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 19: 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 20: Expanded distribution allows educators to engage with Horace Mann the way they choose
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 21: Positioned with significant cross-sell opportunities between worksite product lines
Positioned with 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 & Casualty 2021 premiums(
Slide 22: 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 worksite direct P&C and L&R supplemental customers and SLS users are a natural cross-sell universe (including third-party) for our retail products Revenu
Slide 23: Strong retention across retail business lines illustrates value proposition for educators
Strong retention across retail business lines illustrates value proposition for educators Retail customer retention Auto customer retention breakdown 100% 100% 96.1% 96.0% 95% 95% 95.0% 93.7% 89.6% 90% 90% 87.2% 85% 87.0% 85% 94.1% 90.3% 91.3% 83.5% 80% 80% 83.7% 75% 75% 1Q21 2Q21 3Q21 4Q21 1Q22 2Q2
Slide 24: Business details and results
Business details and results
Slide 25: 2022 results reflected inflationary trends and impact of financial market volatility
2022 results reflected inflationary trends and impact of financial market volatility Offset benefits of education market focus, sales momentum and business diversification Total revenues • 2022 net loss of $0.06 per share and core earnings of $1.09 per share - Property & Casualty segment loss reflec
Slide 26: P&C segment: Providing coverage to protect what educators have today
P&C segment: Providing coverage to protect what educators have today Horace Mann 2022 revenues(1) Products • Auto, homeowners, renters and umbrella • Majority of P&C business is bundled auto Supplemental and home & Group Benefits • Partnerships through Horace Mann 21% General Agency Property & Casua
Slide 27: P&C segment: Results reflect industry-wide inflationary pressure, but strong retention
P&C segment: Results reflect industry-wide inflationary pressure, but strong retention Net Premiums Written* 2022 results $663 $682 $683 $636 $608 $618 • Full-year loss reflected impact of inflation - Continuing to implement rate and other underwriting actions to address trends millions - Catastroph
Slide 28: 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 2022 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 29: Life & Retirement: Segment earnings lower on net investment income; retention remains strong
Life & Retirement: Segment earnings lower on net investment income; retention remains strong Net annuity contract deposits* 2022 results $447 $449 • Segment core earnings of $52.6 million and $439 $429 $429 $419 adjusted core earnings of $57.5 million reflecting millions - Net interest spread on fix
Slide 30: Supplemental & Group Benefits segment: Providing options to address unexpected events
Supplemental & Group Benefits segment: Providing options to address unexpected events Horace Mann 2022 revenues(1) Products • Individual limited benefit products that are guaranteed renewable and portable - Products include cancer, heart, hospital and accident as well as Supplemental short-term supp
Slide 31: Supplemental & Group Benefits: Includes results of new employer-sponsored product line
Supplemental & Group Benefits: Includes results of new employer-sponsored product line Sales* $4.4 $4.5 $3.7 2022 Results $3.5 $1.1 $2.2 • Segment core earnings up 27.2%, reflecting millions $2.3 $1.3 $2.0 $2.3 strong pre-tax margin due to addition of $1.0 $1.2 $3.4 employer-sponsored product line a
Slide 32: High-quality, well-diversified investment portfolio
High-quality, well-diversified investment portfolio Constructed to support insurance liabilities through various market cycles Portfolio composition(1) • $5.2 billion fixed-maturity portfolio $6.4 billion fair value • 68% A-rated or higher Short-term U.S. Treasury • A+ weighted-average credit qualit
Slide 33: $594M Commercial Mortgage Loan Fund Portfolio
$594M Commercial Mortgage Loan Fund Portfolio Diversified pool of high-quality loans 1% 3% Office • Majority of exposure is to open-ended 14% funds comprised of senior loans 26% Multi-Family • Fund structure and diversification of 5% Retail managers provide access to broader markets – geography, pro
Slide 34: $390M Limited Partnership Fund Portfolio
$390M Limited Partnership Fund Portfolio Well diversified by strategy, vintage year, and potential volatility of returns 2% 5% 11% 2% Corporate Mezz Hedge Funds • Inception-to-date performance strong 21% Infrastructure Debt • 8.50% average annual return with relatively low volatility of returns Infr
Slide 35: 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% 0.0 569% - P&C loss reserves held at top half of 536% independent actuarial range 500% - Conservative L&R product design 507% 500% 0.5 - Suppl
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) • S&P affirmed Horace Mann’s financial strength ratings and outlook in February AM Best A Stable 2023 Company (7/28/22) • AM Best, Fitch and Moody
Slide 38: 2023 single-event catastrophe reinsurance provides PML coverage of approximately 400+ years
2023 single-event catastrophe reinsurance provides PML coverage of approximately 400+ years Retention at $30 million, up from $25 million, first increase since 2011, with higher share of the lowest layer Casualty Property(1) $20M $175M ~400+ yrs 3rd LAYER 2nd LAYER CASUALTY $85M xs $90M CLASH & CONT
Slide 39: Horace Mann at a glance
Horace Mann at a glance Exchange ticker symbol NYSE:HMN Share Price $36.30(1) Weighted Average Diluted Shares (for 4Q22) 41.8 million Market Capitalization $1.5 billion(1) Annualized Dividend Per Share $1.28 Dividend Yield Per Share 3.5%(1) Book Value Per Share $35.33(2) Analyst Coverage Dowling & P