SPRINGFIELD, Ill., July 28 /PRNewswire-FirstCall/ -- Horace Mann Educators Corporation (NYSE: HMN) today reported net income of $23.0 million (56 cents per share) and $45.6 million ($1.12 per share) for the three and six months ended June 30, 2010, compared to $18.6 million (46 cents per share) and $32.0 million (79 cents per share) for the same periods in 2009. Included in net income were net realized gains on securities of $8.3 million ($5.5 million after tax, or 13 cents per share) and $13.2 million ($8.6 million after tax, or 21 cents per share) for the three and six months ended June 30, 2010, respectively. In the same periods in 2009, net income included net realized investment gains of $11.0 million ($7.2 million after tax, or 18 cents per share) and $10.2 million ($6.6 million after tax, or 16 cents per share), respectively. All per-share amounts are stated on a diluted basis.
"The continued improvement in Horace Mann's net unrealized investment gain position, coupled with strong underlying operating results in the second quarter -- particularly in our lead auto and annuity lines -- resulted in a June 30, 2010 reported book value per share of $22.17, an increase of 55 percent over the last twelve months," said Louis G. Lower, President and Chief Executive Officer. "Net income before realized investment gains and losses was 43 cents per share for the second quarter compared to 28 cents a year ago, led by improved results in our auto line," continued Lower. "Even with a significant level of second quarter catastrophe losses and an increase in Florida sinkhole claims, our property and casualty earnings increased substantially compared to the second quarter of the prior year. The current accident year combined ratio excluding catastrophes was just below 90 percent in the current quarter, which was nearly 5 percentage points better than the same period last year. The improvement in the segment's combined ratio was primarily driven by a decrease in the auto loss ratio. Combined annuity and life segment net income increased in the second quarter compared to prior year, including a notable improvement in the interest margin, partially offset by the impact of this quarter's valuation of annuity deferred policy acquisition costs."
Segment Earnings
The property and casualty segment recorded net income of $8.5 million for the quarter, an increase of $4.9 million compared to the same period in 2009. Pretax catastrophe costs in the current quarter of $16.2 million were slightly higher than the $15.1 million incurred in the second quarter of 2009. The second quarter 2010 property and casualty combined ratio was 99.0 percent, including 11.6 percentage points due to catastrophe costs, compared to 103.8 percent, including 11.1 percentage points due to catastrophe costs, in the prior year period. Excluding claim settlement expenses, Florida sinkhole losses incurred in the current quarter and for the six months of $4.5 million and $8.0 million, respectively, were consistent with the company's experience in the last two quarters of 2009; however, they were higher than the $1.5 million and $2.8 million incurred in the three and six months ended June 30, 2009. "While high catastrophe and sinkhole losses continue to be a headwind to property and casualty earnings, our Florida risk mitigation plan, primarily focused on non-renewals, is currently ahead of schedule," said Lower. Favorable prior years' reserve development totaling $2.8 million was recorded in the second quarter, which represented 2.0 percentage points on the combined ratio, compared to $2.1 million, or 1.5 percentage points on the combined ratio, recorded in the second quarter of 2009. In addition to the prior year development, favorable current accident year reserve development of $1.5 million was also recorded in the second quarter of 2010 in the auto line.
Annuity segment net income was $6.9 million for the three months ended June 30, 2010, increasing $0.6 million compared to the same period in 2009. The current quarter included increased amortization as a result of the valuation of deferred policy acquisition costs of $5.3 million compared to prior year, partially offset by a $1.4 million reduction in the Company's liability for uncertain tax positions. The interest margin earned on fixed annuity assets increased 34 percent compared to the second quarter of 2009, with year-to-date net interest spreads reaching 2.02 percent for the current period, up 46 basis points compared to a year ago. Charges and fees earned in the quarter, primarily on variable annuity contracts, increased 32 percent compared to prior year. Total annuity net fund flows continued to be positive in the current period, as they were throughout 2008 and 2009, with total accumulated account values increasing 11 percent compared to 12 months earlier. Total cash value persistency of 94 percent increased slightly compared to prior year.
Life segment net income of $5.5 million for the second quarter increased $0.5 million compared to the same period in 2009, primarily due to growth in investment income. Higher mortality costs in the current period were partially offset by lower operating expenses. Life persistency increased to nearly 95 percent.
Segment Revenues
Compared to 2009, the company's total premiums written and contract deposits decreased 4 percent for the quarter, reducing year-to-date growth to 2 percent, as increases in the property and casualty segment were offset by the current quarter decrease in annuity deposit receipts.
Total property and casualty premiums written increased 3 percent and 2 percent for the current quarter and six months, respectively, each reflecting increases in average property and auto premiums per policy.
Annuity deposits received decreased 13 percent compared to the three months ended June 30, 2009, comprised of a 22 percent reduction in single deposit and rollover receipts and a 6 percent decrease in scheduled, flexible premium annuity deposit receipts. For the six months, receipts for both types of annuity deposits increased slightly compared to a year earlier. Life segment insurance premiums and contract deposits decreased 2 percent and 1 percent compared to the prior year three and six months, respectively.
Sales and Distribution
For the three and six months ended June 30, 2010, total new auto sales units decreased 5 percent and 4 percent, respectively, compared to the same periods in the prior year, primarily reflecting decreases in true new auto sales of 7 percent and 4 percent, respectively. Following the significant growth of 50 percent in the first half of 2009, total annuity sales decreased 23 percent in the current quarter -- largely driven by a decrease in single premium and rollover deposits -- and 16 percent for the six months, which included a decline in flexible premium annuity sales of approximately 50 percent. Total new life production increased 16 percent and 2 percent compared to the prior year quarter and six months, due primarily to an increase in sales of third-party vendor products.
At June 30, 2010, there were 343 Horace Mann Exclusive Agencies, an increase of 93 compared to December 31, 2009. The company's Exclusive Agent opportunity was launched on January 1, 2009. Of the 343 Exclusive Agencies at quarter-end, 187 were formed by previous Employee Agents and 156 were formed by new appointments. In addition to the Exclusive Agencies, there were 339 Employee Agents at quarter-end. Combined, there were 682 Exclusive Agencies and Employee Agents at June 30, 2010, compared to 716 at December 31, 2009 and 684 at June 30, 2009. "While we did experience a decline in the total number of agencies and agents in the first six months -- including a first quarter seasonal pattern that is not unusual for us -- we are expecting a modest increase over the remainder of 2010," said Lower.
Investment Gains and Losses
In the second quarter of 2010, pretax net realized investment gains were $8.3 million. The company realized $14.1 million of gross gains on securities that were disposed of during the quarter, partially offset by a $0.7 million credit-related impairment write-down and $5.1 million of realized impairment losses on other security disposals.
Horace Mann's net unrealized investment gains on fixed maturity and equity securities of $222.8 million at June 30, 2010 continued to reflect improvement compared to the net unrealized gains of $101.7 million and $36.1 million at March 31, 2010 and December 31, 2009, respectively, and the net unrealized loss of $171.3 million at June 30, 2009.
Horace Mann -- the largest national multiline insurance company focusing on educators' financial needs -- provides auto and homeowners insurance, retirement annuities, life insurance and other financial solutions. Founded by Educators for Educators® in 1945, the company is headquartered in Springfield, Ill. For more information, visit www.horacemann.com.
Statements included in this news release that are not historical in nature are forward-looking within the meaning of the Private Securities Litigation Reform Act of 1995 and are subject to certain risks and uncertainties. Horace Mann is not under any obligation to (and expressly disclaims any such obligation to) update or revise any forward-looking statements, whether as a result of new information, future events or otherwise. Please refer to the company's Quarterly Report on Form 10-Q for the period ended March 31, 2010 and the company's past and future filings and reports filed with the Securities and Exchange Commission for information concerning the important factors that could cause actual results to differ materially from those in forward-looking statements.
HORACE MANN EDUCATORS CORPORATION
Digest of Earnings and Highlights (Unaudited)
(Dollars in Millions, Except Per Share Data)
Quarter Ended
June 30,
--------
2010 2009 % Change
---- ---- --------
DIGEST OF EARNINGS
------------------
Net income $23.0 $18.6 23.7%
Net income per share:
Basic $0.59 $0.48 22.9%
Diluted $0.56 $0.46 21.7%
Weighted average number of shares and
equivalent shares (in millions)
Basic 39.3 39.2 0.3%
Diluted 40.9 40.5 1.0%
HIGHLIGHTS
----------
Operations
----------
Insurance premiums written and contract
deposits $254.8 $264.7 -3.7%
Return on equity (A)
Property & Casualty GAAP combined ratio 99.0% 103.8% N.M.
Effect of catastrophe costs on the
Property & Casualty combined ratio 11.6% 11.1% N.M.
Exclusive agencies (B)
Employee agents (C)
Total
Additional Per Share Information
--------------------------------
Dividends paid $0.08 $0.0525 52.4%
Book value (D)
Financial Position
------------------
Total assets
Short-term debt
Long-term debt
Total shareholders' equity
Six Months Ended
June 30,
--------
2010 2009 % Change
---- ---- --------
DIGEST OF EARNINGS
------------------
Net income $45.6 $32.0 42.5%
Net income per share:
Basic $1.16 $0.82 41.5%
Diluted $1.12 $0.79 41.8%
Weighted average number of shares and
equivalent shares (in millions)
Basic 39.2 39.2 -
Diluted 40.9 40.5 1.0%
HIGHLIGHTS
----------
Operations
----------
Insurance premiums written and contract
deposits $493.5 $486.0 1.5%
Return on equity (A) 11.9% 4.8% N.M.
Property & Casualty GAAP combined ratio 97.7% 99.2% N.M.
Effect of catastrophe costs on the
Property & Casualty combined ratio 8.3% 7.2% N.M.
Exclusive agencies (B) 343 133 157.9%
Employee agents (C) 339 551 -38.5%
Total 682 684 -0.3%
Additional Per Share Information
--------------------------------
Dividends paid $0.16 $0.105 52.4%
Book value (D) $22.17 $14.34 54.6%
Financial Position
------------------
Total assets $6,669.4 $5,828.2 14.4%
Short-term debt 38.0 38.0 -
Long-term debt 199.6 199.6 -
Total shareholders' equity 873.6 561.8 55.5%
N.M. - Not meaningful.
Based on trailing 12-month net income and average quarter-end
(A) shareholders' equity.
Local Horace Mann agencies created and owned by independent
contractors who have signed Exclusive Agent agreements with the
Company ("Exclusive Agents"). The agreement states that only the
Company's products and limited additional third-party vendor
products authorized by the Company will be marketed by the agency.
An individual may sign multiple Exclusive Agent agreements with
(B) the Company resulting in creation of multiple Exclusive Agencies.
Agents who have employee status with the Company and by contract
market only the Company's products and limited additional third-
(C) party vendor products authorized by the Company.
Book value per share excluding the fair value adjustment for
investments was $18.79 at June 30, 2010 and $16.86 at June 30,
2009. Ending shares outstanding were 39,398,373 at June 30, 2010
(D) and 39,176,856 at June 30, 2009.
- 1 -
HORACE MANN EDUCATORS CORPORATION
Statements of Operations and Supplemental GAAP Consolidated Data
(Unaudited)
(Dollars in Millions)
Quarter Ended
June 30,
--------
2010 2009 % Change
---- ---- --------
STATEMENTS OF OPERATIONS
------------------------
Insurance premiums and contract
charges earned $168.4 $163.5 3.0%
Net investment income 69.1 61.0 13.3%
Net realized investment gains 8.3 11.0 -24.5%
Other income 2.2 1.9 15.8%
Total revenues 248.0 237.4 4.5%
Benefits, claims and settlement
expenses 118.4 118.2 0.2%
Interest credited 36.2 34.5 4.9%
Policy acquisition expenses
amortized 25.8 19.1 35.1%
Operating expenses 33.4 35.0 -4.6%
Amortization of intangible
assets - - -
Interest expense 3.5 3.5 -
Total benefits, losses and
expenses 217.3 210.3 3.3%
Income before income taxes 30.7 27.1 13.3%
Income tax expense 7.7 8.5 -9.4%
Net income $23.0 $18.6 23.7%
ANALYSIS OF PREMIUMS WRITTEN
AND CONTRACT DEPOSITS __
-------------------------------
Property & Casualty
Automobile and property
(voluntary) $143.1 $139.7 2.4%
Involuntary and other property &
casualty 1.2 1.0 20.0%
Total Property & Casualty 144.3 140.7 2.6%
Annuity deposits 85.9 98.9 -13.1%
Life 24.6 25.1 -2.0%
Total $254.8 $264.7 -3.7%
ANALYSIS OF SEGMENT NET INCOME
(LOSS)
------------------------------
Property & Casualty $8.5 $3.6 136.1%
Annuity 6.9 6.3 9.5%
Life 5.5 5.0 10.0%
Corporate and other (A) 2.1 3.7 -43.2%
Net income 23.0 18.6 23.7%
Catastrophe costs, after tax,
included above (B) (10.6) (9.8) 8.2%
Six Months Ended
June 30,
--------
2010 2009 % Change
---- ---- --------
STATEMENTS OF OPERATIONS
------------------------
Insurance premiums and contract
charges earned $334.8 $326.0 2.7%
Net investment income 135.0 118.9 13.5%
Net realized investment gains 13.2 10.2 29.4%
Other income 3.7 4.8 -22.9%
Total revenues 486.7 459.9 5.8%
Benefits, claims and settlement
expenses 231.3 226.0 2.3%
Interest credited 71.8 68.2 5.3%
Policy acquisition expenses
amortized 45.9 42.1 9.0%
Operating expenses 68.1 70.7 -3.7%
Amortization of intangible
assets - 0.2 -100.0%
Interest expense 7.0 7.0 -
Total benefits, losses and
expenses 424.1 414.2 2.4%
Income before income taxes 62.6 45.7 37.0%
Income tax expense 17.0 13.7 24.1%
Net income $45.6 $32.0 42.5%
ANALYSIS OF PREMIUMS WRITTEN
AND CONTRACT DEPOSITS __
-------------------------------
Property & Casualty
Automobile and property
(voluntary) $273.0 $267.9 1.9%
Involuntary and other property
& casualty 2.5 1.9 31.6%
Total Property & Casualty 275.5 269.8 2.1%
Annuity deposits 170.1 167.6 1.5%
Life 47.9 48.6 -1.4%
Total $493.5 $486.0 1.5%
ANALYSIS OF SEGMENT NET INCOME
(LOSS)
------------------------------
Property & Casualty $19.5 $16.0 21.9%
Annuity 14.2 7.5 89.3%
Life 10.1 8.4 20.2%
Corporate and other (A) 1.8 0.1 N.M.
Net income 45.6 32.0 42.5%
Catastrophe costs, after tax,
included above (B) (15.0) (12.7) 18.1%
N.M. - Not meaningful.
The Corporate and Other segment includes interest expense on debt
and the impact of realized investment gains and losses and other
corporate level items. The Company does not allocate the impact
of corporate level transactions to the insurance segments
consistent with how management evaluates the results of those
(A) segments. See detail for this segment on page 4.
Includes allocated loss adjustment expenses and catastrophe
(B) reinsurance reinstatement premiums. See also page 3.
- 2 -
HORACE MANN EDUCATORS CORPORATION
Supplemental Business Segment Overview (Unaudited)
(Dollars in Millions)
Quarter Ended
June 30,
--------
2010 2009 % Change
---- ---- --------
PROPERTY & CASUALTY
-------------------
Premiums written $144.3 $140.7 2.6%
Premiums earned 138.8 135.8 2.2%
Net investment income 9.0 8.5 5.9%
Other income 0.3 0.6 -50.0%
Losses and loss adjustment
expenses (LAE) 103.5 106.7 -3.0%
Operating expenses (includes
policy acquisition expenses
amortized) 34.0 34.2 -0.6%
Income before tax 10.6 4.0 165.0%
Net income 8.5 3.6 136.1%
Net investment income, after
tax 7.8 7.2 8.3%
Catastrophe costs, after tax
(A) 10.6 9.8 8.2%
Catastrophe losses and LAE,
before tax 16.2 15.1 7.3%
Reinsurance reinstatement
premiums, before tax - - -
Operating statistics:
Loss and loss adjustment
expense ratio 74.5% 78.5% N.M.
Expense ratio 24.5% 25.3% N.M.
Combined ratio 99.0% 103.8% N.M.
Effect on the combined ratio
of:
Catastrophe costs 11.6% 11.1% N.M.
Claims office consolidation
costs (all in LAE) - 0.2% N.M.
Automobile and property detail:
Premiums written (voluntary)
(B) $143.1 $139.7 2.4%
Automobile 92.7 91.7 1.1%
Property 50.4 48.0 5.0%
Premiums earned (voluntary) (B) 138.2 135.3 2.1%
Automobile 93.5 92.3 1.3%
Property 44.7 43.0 4.0%
Policies in force (voluntary)
(in thousands)
Automobile
Property
Policy renewal rate (voluntary)
Automobile (6 months)
Property (12 months)
Voluntary automobile operating
statistics:
Loss and loss adjustment
expense ratio 63.7% 69.3% N.M.
Expense ratio 24.5% 25.2% N.M.
Combined ratio 88.2% 94.5% N.M.
Effect on the combined ratio
of:
Catastrophe costs 1.5% 0.9% N.M.
Claims office consolidation
costs (all in LAE) - 0.2% N.M.
Total property operating
statistics:
Loss and loss adjustment
expense ratio 96.6% 98.5% N.M.
Expense ratio 24.8% 25.3% N.M.
Combined ratio 121.4% 123.8% N.M.
Effect on the combined ratio
of:
Catastrophe costs 33.4% 33.6% N.M.
Claims office consolidation
costs (all in LAE) - 0.2% N.M.
Prior years' reserves favorable
(adverse)
development, pretax
Voluntary automobile $2.8 $2.5 12.0%
Total property - (0.4) -100.0%
Other property and casualty - - -
Total 2.8 2.1 33.3%
Six Months Ended
June 30,
--------
2010 2009 % Change
---- ---- --------
PROPERTY & CASUALTY
-------------------
Premiums written $275.5 $269.8 2.1%
Premiums earned 276.5 270.8 2.1%
Net investment income 17.9 16.8 6.5%
Other income 0.3 2.0 -85.0%
Losses and loss adjustment
expenses (LAE) 201.9 200.3 0.8%
Operating expenses (includes
policy acquisition expenses
amortized) 68.3 68.4 -0.1%
Income before tax 24.5 20.9 17.2%
Net income 19.5 16.0 21.9%
Net investment income, after
tax 15.4 14.2 8.5%
Catastrophe costs, after tax
(A) 15.0 12.7 18.1%
Catastrophe losses and LAE,
before tax 23.0 19.6 17.3%
Reinsurance reinstatement
premiums, before tax - - -
Operating statistics:
Loss and loss adjustment
expense ratio 73.0% 73.9% N.M.
Expense ratio 24.7% 25.3% N.M.
Combined ratio 97.7% 99.2% N.M.
Effect on the combined ratio
of:
Catastrophe costs 8.3% 7.2% N.M.
Claims office consolidation
costs (all in LAE) - 1.2% N.M.
Automobile and property
detail:
Premiums written (voluntary)
(B) $273.0 $267.9 1.9%
Automobile 186.0 184.6 0.8%
Property 87.0 83.3 4.4%
Premiums earned (voluntary)
(B) 275.0 269.7 2.0%
Automobile 186.1 184.0 1.1%
Property 88.9 85.7 3.7%
Policies in force (voluntary)
(in thousands) 781 793 -1.5%
Automobile 522 531 -1.7%
Property 259 262 -1.1%
Policy renewal rate
(voluntary)
Automobile (6 months) 91.4% 91.5% N.M.
Property (12 months) 88.7% 89.3% N.M.
Voluntary automobile operating
statistics:
Loss and loss adjustment
expense ratio 67.0% 69.9% N.M.
Expense ratio 24.7% 25.5% N.M.
Combined ratio 91.7% 95.4% N.M.
Effect on the combined ratio
of:
Catastrophe costs 0.8% 0.7% N.M.
Claims office consolidation
costs (all in LAE) - 1.5% N.M.
Total property operating
statistics:
Loss and loss adjustment
expense ratio 85.2% 82.7% N.M.
Expense ratio 25.0% 24.8% N.M.
Combined ratio 110.2% 107.5% N.M.
Effect on the combined ratio
of:
Catastrophe costs 24.5% 21.6% N.M.
Claims office consolidation
costs (all in LAE) - 0.8% N.M.
Prior years' reserves
favorable (adverse)
development, pretax
Voluntary automobile $5.5 $5.0 10.0%
Total property 1.8 - N.M.
Other property and casualty - 0.5 -100.0%
Total 7.3 5.5 32.7%
N.M. - Not meaningful.
Includes allocated loss adjustment expenses and catastrophe
(A) reinsurance reinstatement premiums.
Amounts are net of additional ceded premiums to reinstate the
Company's property and casualty catastrophe reinsurance
(B) coverage, if any, as quantified above.
- 3 -
HORACE MANN EDUCATORS CORPORATION
Supplemental Business Segment Overview (Unaudited)
(Dollars in Millions)
Quarter Ended
June 30,
--------
2010 2009 % Change
---- ---- --------
ANNUITY
-------
Contract deposits $85.9 $98.9 -13.1%
Variable 28.4 29.8 -4.7%
Fixed 57.5 69.1 -16.8%
Contract charges earned 4.5 3.4 32.4%
Net investment income 42.7 37.0 15.4%
Net interest margin (without realized
investment gains and losses) 16.6 12.4 33.9%
Other income 1.1 0.6 83.3%
Mortality loss and other reserve
changes (0.6) 0.9 N.M.
Operating expenses (includes policy
acquisition expenses amortized) 13.6 8.0 70.0%
Income before tax 8.0 9.3 -14.0%
Net income 6.9 6.3 9.5%
Pretax income increase (decrease) due
to valuation of:
Deferred policy acquisition costs $(4.0) $1.3 N.M.
Guaranteed minimum death benefit
reserve (0.2) 0.7 N.M.
Annuity contracts in force (in
thousands)
Accumulated value on deposit
Variable
Fixed
Annuity accumulated value retention -
12 months
Variable accumulations
Fixed accumulations
LIFE
----
Premiums and contract deposits $24.6 $25.1 -2.0%
Premiums and contract charges earned 25.1 24.3 3.3%
Net investment income 17.6 15.8 11.4%
Income before tax 8.6 7.9 8.9%
Net income 5.5 5.0 10.0%
Pretax income increase (decrease) due
to valuation of:
Deferred policy acquisition costs $- $- -
Life policies in force (in thousands)
Life insurance in force
Lapse ratio - 12 months
(Ordinary life insurance)
CORPORATE AND OTHER (A)
-----------------------
Components of income (loss) before
tax:
Net realized investment gains $8.3 $11.0 -24.5%
Interest expense (3.5) (3.5) -
Other operating expenses, net
investment income and other income (1.3) (1.6) -18.8%
Income before tax 3.5 5.9 -40.7%
Net income 2.1 3.7 -43.2%
Six Months Ended
June 30,
--------
2010 2009 % Change
---- ---- --------
ANNUITY
-------
Contract deposits $170.1 $167.6 1.5%
Variable 55.8 56.0 -0.4%
Fixed 114.3 111.6 2.4%
Contract charges earned 8.8 6.6 33.3%
Net investment income 83.1 71.8 15.7%
Net interest margin (without
realized investment gains and
losses) 31.4 23.2 35.3%
Other income 2.0 1.4 42.9%
Mortality loss and other reserve
changes (0.9) 0.3 N.M.
Operating expenses (includes
policy acquisition expenses
amortized) 22.2 20.5 8.3%
Income before tax 19.1 11.0 73.6%
Net income 14.2 7.5 89.3%
Pretax income increase (decrease)
due to valuation of:
Deferred policy acquisition costs $(2.8) $(1.7) 64.7%
Guaranteed minimum death benefit
reserve (0.1) 0.2 N.M.
Annuity contracts in force (in
thousands) 178 177 0.6%
Accumulated value on deposit $3,777.3 $3,401.1 11.1%
Variable 1,199.5 1,012.5 18.5%
Fixed 2,577.8 2,388.6 7.9%
Annuity accumulated value
retention -12 months
Variable accumulations 93.3% 93.4% N.M.
Fixed accumulations 94.5% 94.1% N.M.
LIFE
----
Premiums and contract deposits $47.9 $48.6 -1.4%
Premiums and contract charges
earned 49.5 48.6 1.9%
Net investment income 34.5 30.8 12.0%
Income before tax 15.7 13.3 18.0%
Net income 10.1 8.4 20.2%
Pretax income increase (decrease)
due to valuation of:
Deferred policy acquisition costs $(0.1) $(0.1) -
Life policies in force (in
thousands) 210 219 -4.1%
Life insurance in force $13,811 $13,680 1.0%
Lapse ratio - 12 months
(Ordinary life insurance) 5.1% 5.5% N.M.
CORPORATE AND OTHER (A)
-----------------------
Components of income (loss)
before tax:
Net realized investment gains $13.2 $10.2 29.4%
Interest expense (7.0) (7.0) -
Other operating expenses, net
investment income and other
income (2.9) (2.7) 7.4%
Income before tax 3.3 0.5 N.M.
Net income 1.8 0.1 N.M.
N.M. - Not meaningful.
The Corporate and Other segment includes interest expense on
debt and the impact of realized investment gains and losses
and other corporate level items. The Company does not
allocate the impact of corporate level transactions to the
insurance segments consistent with how management evaluates
(A) the results of those segments.
- 4 -
HORACE MANN EDUCATORS CORPORATION
Supplemental Business Segment Overview (Unaudited)
(Dollars in Millions)
Quarter Ended
June 30,
--------
2010 2009 % Change
---- ---- --------
INVESTMENTS
-----------
Annuity and Life
Fixed maturities, at fair value
(amortized cost 2010, $3,514.9;
2009, $3,105.7)
Equity securities, at fair value
(cost 2010, $29.8; 2009, $46.3)
Short-term investments
Short-term investments, securities
lending collateral
Policy loans and other
Total Annuity and Life investments
Property & Casualty
Fixed maturities, at fair value
(amortized cost 2010, $756.7; 2009,
$705.4)
Equity securities, at fair value
(cost 2010, $18.0; 2009, $20.0)
Short-term investments
Short-term investments, securities
ending collateral
Total Property & Casualty investments
Corporate investments
Total investments
Net investment income
Before tax $69.1 $61.0 13.3%
After tax 46.8 41.5 12.8%
Net realized investment gains
(losses) by investment portfolio
included in Corporate and Other
segment loss
Property & Casualty $1.3 $2.3 -43.5%
Annuity 6.7 7.3 -8.2%
Life 0.1 1.4 -92.9%
Corporate and Other 0.2 - N.M.
--- ---
Total, before tax 8.3 11.0 -24.5%
Total, after tax 5.5 7.2 -23.6%
Per share, diluted $0.13 $0.18 -27.8%
Six Months Ended
June 30,
--------
2010 2009 % Change
---- ---- --------
INVESTMENTS
-----------
Annuity and Life
Fixed maturities, at fair value
(amortized cost 2010,
$3,514.9; 2009, $3,105.7) $3,710.2 $2,953.7 25.6%
Equity securities, at fair
value (cost 2010, $29.8;
2009, $46.3) 27.9 36.6 -23.8%
Short-term investments 176.8 341.9 -48.3%
Short-term investments,
securities lending collateral - - -
Policy loans and other 117.5 111.7 5.2%
----- -----
Total Annuity and Life
investments 4,032.4 3,443.9 17.1%
Property & Casualty
Fixed maturities, at fair value
(amortized cost 2010, $756.7;
2009, $705.4) 783.7 698.7 12.2%
Equity securities, at fair
value (cost 2010, $18.0;
2009, $20.0) 20.4 17.1 19.3%
Short-term investments 13.6 18.1 -24.9%
Short-term investments,
securities ending collateral - - -
--- ---
Total Property & Casualty
investments 817.7 733.9 11.4%
Corporate investments 23.9 29.1 -17.9%
Total investments 4,874.0 4,206.9 15.9%
Net investment income
Before tax $135.0 $118.9 13.5%
After tax 91.5 80.6 13.5%
Net realized investment gains
(losses) by investment
portfolio included in
Corporate and Other segment
loss
Property & Casualty $3.7 $(5.9) N.M.
Annuity 8.5 11.4 -25.4%
Life 0.8 4.7 -83.0%
Corporate and Other 0.2 - N.M.
--- ---
Total, before tax 13.2 10.2 29.4%
Total, after tax 8.6 6.6 30.3%
Per share, diluted $0.21 $0.16 31.3%
N.M. - Not meaningful.
- 5 -
HORACE MANN EDUCATORS CORPORATION
Supplemental Business Segment Overview (Unaudited)
(Dollars in Millions)
March 31,
June 30, 2010 2010
------------- ----
Net Net
Fair Unrealized Unrealized
Value Gain (Loss) Gain (Loss)
----- ----------- -----------
FIXED MATURITY & EQUITY
SECURITY INVESTMENTS
-----------------------
Fixed income securities
U.S. government and
federally sponsored
agency bonds $452.0 $11.4 $(10.0)
Municipal bonds 957.7 46.5 28.9
Corporate bonds
Financial institutions 270.1 14.0 14.1
Other 1,398.7 127.6 88.7
High yield 191.2 (2.4) (1.8)
Foreign government bonds 33.3 1.4 2.8
Mortgage-backed
securities
Prime agency 493.4 35.1 17.6
Prime other 16.0 0.6 0.3
Sub-prime, Alt-A 0.5 (0.1) (0.1)
Commercial mortgage-
backed securities 262.1 (23.9) (51.5)
Asset-backed securities
Sub-prime, Alt-A 0.3 - -
Collateralized debt
obligations,
collateralized loan
obligations 32.7 (1.6) (1.9)
Other 311.3 15.0 12.0
Preferred stocks
Financial institutions 78.3 (3.4) (1.3)
Other 42.9 1.6 2.8
---- --- ---
Total fixed income
securities 4,540.5 221.8 100.6
Common stocks 1.7 1.0 1.1
Derivatives - - -
--- --- ---
Total fixed maturity and
equity security
investments $4,542.2 $222.8 $101.7
======== ====== ======
December 31, September 30, June 30,
2009 2009 2009
---- ---- ----
Net Unrealized Net Unrealized Net Unrealized
Gain (Loss) Gain (Loss) Gain (Loss)
----------- ----------- -----------
FIXED MATURITY &
EQUITY SECURITY
INVESTMENTS
----------------
Fixed income
securities
U.S. government and
federally sponsored
agency bonds $(13.8) $2.0 $(2.5)
Municipal bonds 22.8 56.1 6.3
Corporate bonds
Financial
institutions 8.1 6.9 (11.0)
Other 73.0 84.6 (14.3)
High yield (5.9) (11.8) (26.4)
Foreign government
bonds 2.0 3.0 0.7
Mortgage-backed
securities
Prime agency 18.3 23.9 18.5
Prime other 0.4 0.5 (0.8)
Sub-prime, Alt-A (0.1) (0.4) (0.8)
Commercial mortgage-
backed securities (67.5) (71.7) (106.6)
Asset-backed
securities
Sub-prime, Alt-A - (0.5) (0.3)
Collateralized debt
obligations,
collateralized loan
obligations (4.1) (3.3) (4.0)
Other 8.2 4.5 (4.8)
Preferred stocks
Financial
institutions (6.4) (9.5) (19.7)
Other 0.3 (0.7) (6.1)
--- ---- ----
Total fixed income
securities 35.3 83.6 (171.8)
Common stocks 0.8 0.5 0.5
Derivatives - - -
--- --- ---
Total fixed maturity
and equity security
investments $36.1 $84.1 $(171.3)
===== ===== =======
- 6 -
SOURCE Horace Mann Educators Corporation