Slide 1: Third Quarter 2022 Investor Presentation
Third Quarter 2022 Investor Presentation November 3, 2022 Information as September 30, 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 • $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: 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 multi-year effort to build PDI framework
Addition of worksite solutions capped multi-year effort to build PDI framework 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 u
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 2022 EPS guidance updated to Results include a net 40 cents of $1.70 - $2.00 above-historical average returns on Reflects impact of inflation, financial limited partnership portfolio offset Core EPS
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) New repurchase authorization added in May 2022 8.5% CAGR $48.54 $47.24 $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 increases with current yield of 3.2%(
Slide 12: 2022 EPS guidance now $1.70 - $2.00
2022 EPS guidance now $1.70 - $2.00 Reflects impact of inflation and other factors on auto loss severity, higher-than-historic average full-year catastrophe activity and financial market volatility Segment / Current Considerations update guidance • Continuing to target long-term 10% Property & Casua
Slide 13: Education market opportunity
Education market opportunity
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: 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 17: 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 18: 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 19: 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 20: 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 21: 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 86.9% auto customer retention breakdown 100% 100% 96.1% 96.0% 95% 95% 95.0% 94.0% 89.5% 90% 90% 87.2% 85% 86.9% 85% 92.8% 83.5% 89.2% 89.9% 80% 80% 80.0% 75% 75% 1Q21 2Q21 3Q21 4Q21 1Q
Slide 22: Business details and results
Business details and results
Slide 23: Q3 results benefit from earnings diversification of Supplemental & Group Benefits segment
Q3 results benefit from earnings diversification of Supplemental & Group Benefits segment Offsets ongoing effect of financial market volatility and continuing impact of inflation on Property & Casualty segment results Total revenues • Third-quarter net earnings of $0.33 per share and core earnings*
Slide 24: 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 YTD revenues(1) Products • Auto, homeowners, renters and umbrella • Majority of P&C business is bundled auto Supplemental and home & Group • Partnerships through Horace Mann Benefits 22% General Agency Property & C
Slide 25: P&C segment: Results reflect inflationary pressure, strong retention
P&C segment: Results reflect inflationary pressure, strong retention Net Premiums Written* Q3 results $663 $682 $683 $636 $608 $611 • Earnings reflect substantially lower catastrophe losses, partially offset by impact of inflation on loss costs, which resulted in a millions lower segment combined ra
Slide 26: 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 YTD Products revenues(1) • 403(b) tax-qualified fixed, fixed index and variable annuities Supplemental • Horace Mann Retirement Advantage® open & Group architecture platform for 403(b)(7) and
Slide 27: Life & Retirement: Segment earnings lower on net investment income; retention strong
Life & Retirement: Segment earnings lower on net investment income; retention strong Net annuity contract deposits* Q3 results $447 $449 • Segment core earnings* down due to $439 $429 $429 $419 decline in interest margin and lower charges and fees on variable annuities and asset- millions based acco
Slide 28: Supplemental & Group Benefits segment: Providing options to address unexpected events
Supplemental & Group Benefits segment: Providing options to address unexpected events Horace Mann 2022 YTD revenues(1) Products • Individual limited benefit products that are guaranteed renewable and portable - Products include Cancer, Heart, Hospital and Accident as well Supplemental as short-term
Slide 29: 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 $3.7 $3.5 Q3 results 2.2 millions $2.0 $2.2 $2.3 1.3 • Segment core earnings* up 67.0%, $1.2 reflecting addition of employer-sponsored $2.0 $2.2 $2.2 $2.2 product line, as well as lower level of benefi
Slide 30: Investments: High-quality, well-diversified portfolio
Investments: High-quality, well-diversified portfolio Constructed to support insurance liabilities through various market cycles Portfolio composition(1) • $5.3 billion fixed-maturity portfolio $6.5 billion fair value • 67% A-rated or higher Short-term U.S. Treasury 1% & Agency • A+ weighted-average
Slide 31: $602M Commercial Mortgage Loan Fund Portfolio
$602M Commercial Mortgage Loan Fund Portfolio Diversified pool of high-quality loans 1% 4% Office • Majority of exposure is to open-ended 12% funds comprised of senior loans Multi-Family 5% 30% • Fund structure and diversification of Retail managers provide access to broader Industrial markets – geo
Slide 32: $396M Limited Partnership Fund Portfolio
$396M Limited Partnership Fund Portfolio Well diversified by strategy, vintage year, and potential volatility of returns 2% 5% 11% Corporate Mezz 5% Hedge Funds • 8.57% average annual return through 19% end of 2021 with relatively low Infrastructure Debt volatility of returns Infrastructure Equity 1
Slide 33: 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 34: Appendix
Appendix
Slide 35: 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, Fitch and Moody’s affirmed Horace Mann’s financial strength ratings AM Best A Stable in third quarter Company (7/28/22) • Horace Mann’s
Slide 36: 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 37: Horace Mann at a glance
Horace Mann at a glance Exchange ticker symbol NYSE:HMN Share Price $39.46(1) Weighted Average Diluted Shares (for 3Q22) 41.6 million Market Capitalization $1.6 billion(1) Annualized Dividend Per Share $1.28 Dividend Yield Per Share 3.2%(1) Book Value Per Share* $36.02(2) Analyst Coverage Dowling &