Horace Mann Educators Corporation

11/07/2025 | Press release | Distributed by Public on 11/07/2025 11:58

Quarterly Report for Quarter Ending September 30, 2025 (Form 10-Q)

I Management's Discussion and Analysis of Financial Condition and Results of Operations (MD&A)
Page
Introduction
Corporate Strategy
Consolidated Financial Highlights
Consolidated Results of Operations
Outlook for 2025
Application of Critical Accounting Estimates
Results of Operations by Segment
Property & Casualty
Life & Retirement
Supplemental & Group Benefits
Corporate & Other
Investment Results
Liquidity and Capital Resources
Introduction
The purpose of this MD&A is to provide an understanding of our consolidated results of operations and financial condition. This MD&A should be read in conjunction with the Consolidated Financial Statements and Notes thereto contained in Part I - Item 1 of this Quarterly Report on Form 10-Q.
Measures within this MD&A that are not based on accounting principles generally accepted in the United States of America (non-GAAP) are marked with an asterisk (*) the first time they are presented within this Part I - Item 2. An explanation of these measures is contained in the Glossary of Selected Terms included as Exhibit 99.1 to this Quarterly Report on Form 10-Q and are reconciled to the most directly comparable measures prepared in accordance with accounting principles generally accepted in the United States of America (GAAP) in the Appendix to the Company's Third Quarter 2025 Investor Supplement.
Increases or decreases in this MD&A that are not meaningful are marked "N.M.".
Statements made in this Quarterly Report on Form 10-Q 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 known and
Horace Mann Educators Corporation
Third Quarter 2025 Form 10-Q
unknown risks, uncertainties and other factors. Horace Mann Educators Corporation (referred to in this Quarterly Report on Form 10-Q as "we", "our", "us", the "Company", "Horace Mann" or "HMEC") is an insurance holding company. We are not under any obligation to (and expressly disclaim any such obligation to) update or revise any forward-looking statements, whether as a result of new information, future events or otherwise. It is important to note that our actual results could differ materially from those projected in forward-looking statements due to a number of risks and uncertainties inherent in our business. Also, see Part I - Items 1 and 1A in our Annual Report on Form 10-K for the year ended December 31, 2024 for additional information regarding risks and uncertainties.
Corporate Strategy
Our vision is to be the company of choice to provide insurance and financial solutions for all educators and others who serve their communities, whether they engage with Horace Mann directly or through their district/employer. We believe the unique value of Horace Mann is providing solutions tailored for educators at each stage of their lives, empowering them to achieve lifelong financial success. Our motivation stems from our gratitude for educators: They are looking after our children's futures, and we believe they deserve someone to look after theirs. Our commitment to having a positive impact on our customers' lives extends to all our corporate stakeholders, including employees, agents, investors and the communities where we live and work.
We conduct and manage our business in four reporting segments. The three reporting segments representing our major lines of business, are: (1) Property & Casualty (primarily personal lines of auto and property insurance products), (2) Life & Retirement (primarily tax-qualified fixed and variable annuities as well as life insurance products), and (3) Supplemental & Group Benefits (primarily cancer, heart, hospital, supplemental disability, accident, short-term and long-term group disability, and group term life coverages). We do not allocate the impact of corporate-level transactions to these reporting segments, consistent with the basis for management's evaluation of the results of those segments, but classify those items in the fourth reporting segment, Corporate & Other. In addition to ongoing transactions such as corporate debt service, net investment gains (losses) and certain public company expenses, such items also have included corporate debt retirement costs, when applicable. See Part I - Item 1, Note 7 of the Consolidated Financial Statements in this Quarterly Report on Form 10-Q for more information.
Consolidated Financial Highlights
(All comparisons vs. same periods in 2024, unless noted otherwise)
($ in millions) Three Months Ended
September 30,
2025-2024
Nine Months Ended
September 30, 		2025-2024
2025 2024 % Change 2025 2024 % Change
Total revenues $ 438.5 $ 412.1 6.4 % $ 1,266.6 $ 1,186.2 6.8 %
Net income
58.3 34.3 70.0 % 125.9 64.6 94.9 %
Net Investment gains (losses), after tax
2.7 3.0 -10.0 % (4.6) 0.1 N.M.
Per diluted share:
Net income
1.40 0.83 68.7 % 3.03 1.56 94.2 %
Net investment gains (losses), after tax
0.06 0.07 -14.3 % (0.11) - N.M.
Book value per share $ 35.31 $ 31.60 11.7 %
Net income return on equity - last twelve months
12.2 % 8.8 % 3.4 pts 12.2 % 8.8 % 3.4 pts
Net income return on equity - annualized 16.6 % 11.0 % 5.6 pts 12.3 % 7.0 % 5.3 pts
For the three and nine months ended September 30, 2025, net income increased $24.0 million and $61.3 million, respectively, primarily due to improved Property & Casualty segment results reflecting both the actions the Company has taken to reduce earnings volatility, and to a larger degree, unusually less severe weather activity including the impact of lower catastrophe losses.
Horace Mann Educators Corporation
Third Quarter 2025 Form 10-Q
Consolidated Results of Operations
(All comparisons vs. same periods in 2024, unless noted otherwise)
($ in millions) Three Months Ended
September 30, 		2025-2024 Nine Months Ended
September 30, 		2025-2024
2025 2024 % Change 2025 2024 % Change
Net premiums and contract charges earned
$ 310.3 $ 289.1 7.3 % $ 911.2 $ 845.2 7.8 %
Net investment income(1)
119.6 113.0 5.8 % 346.3 326.8 6.0 %
Net investment gains (losses)
3.3 3.8 -13.2 % (5.9) 0.1 N.M.
Other income 5.3 6.2 -14.5 % 15.0 14.1 6.4 %
Total revenues
438.5 412.1 6.4 % 1,266.6 1,186.2 6.8 %
Benefits, claims and settlement expenses 171.0 191.3 -10.6 % 537.7 574.9 -6.5 %
Interest credited 55.7 54.8 1.6 % 161.2 161.5 -0.2 %
Operating expenses 96.3 82.9 16.2 % 284.0 250.4 13.4 %
DAC amortization expense 31.5 28.1 12.1 % 91.0 82.1 10.8 %
Intangible asset amortization expense 3.6 3.6 - % 10.8 10.9 -0.9 %
Interest expense 8.9 8.7 2.3 % 26.4 26.1 1.1 %
Total benefits, losses and expenses
367.0 369.4 -0.6 % 1,111.1 1,105.9 0.5 %
Income before income taxes
71.5 42.7 67.4 % 155.5 80.3 93.6 %
Income tax expense
13.2 8.4 57.1 % 29.6 15.7 88.5 %
Net income
$ 58.3 $ 34.3 70.0 % $ 125.9 $ 64.6 94.9 %
(1)In the second quarter of 2025, the Company recorded a reduction in net investment income due to an immaterial out-of-period correction of an error. See additional disclosure contained in Note 1 of the September 30, 2025 Form 10-Q.
Net Premiums and Contract Charges Earned
For the three and nine months ended September 30, 2025, net premiums and contract charges earned increased $21.2 million and $66.0 million, as the Property & Casualty segment continues to implement rate and inflation adjustments to coverage values and the Company sees strong growth in our Supplemental and Group Benefits segment.
Net Investment Income
For the three and nine months ended September 30, 2025, total net investment income increased $6.6 million and $19.5 million. The increase for the quarter is primarily due to continued strong returns from our fixed income portfolio and higher returns from our limited partnership funds. Excluding the reduction in net investment income due to an immaterial out-of-period correction of an error of $10.2 million, net investment income increased $29.7 million for the nine months ended September 30, 2025. The annualized investment yield on the portfolio excluding limited partnership interests* was as follows:
Three Months Ended
September 30, 		Nine Months Ended
September 30,
2025 2024 2025 2024
Investment yield, excluding limited partnership interests, pretax - annualized*(1)
4.9% 4.8% 4.6% 4.5%
Investment yield, excluding limited partnership interests, after tax - annualized*
4.0% 3.8% 3.7% 3.6%
(1)In the second quarter of 2025, the Company recorded a reduction in net investment income due to an immaterial out-of-period correction of an error. See additional disclosure contained in Note 1 of the September 30, 2025 Form 10-Q.
The higher investment yields, excluding limited partnership interests, for the nine months ended September 30, 2025 reflected stronger income from the fixed income portfolios.
Horace Mann Educators Corporation
Third Quarter 2025 Form 10-Q
During the three and nine months ended September 30, 2025, we continued to identify and purchase investments with attractive risk-adjusted yields relative to market conditions without venturing into asset classes or individual securities that would be inconsistent with our overall investment guidelines for the core portfolio. We continue to fund at levels that allow us to maintain our targeted allocation to commercial mortgage loan funds and limited partnership interests while maintaining balance between principal protection and risk.
Net Investment Gains (Losses)
For the three and nine months ended September 30, 2025, total net investment losses were comparable to prior year and increased by $6.0 million, respectively. The breakdown of net investment gains (losses) by transaction type were as follows:
($ in millions) Three Months Ended
September 30, 		Nine Months Ended
September 30,
2025 2024 2025 2024
Credit loss and intent-to-sell impairments $ 0.3 $ (0.7) $ (2.8) $ (0.7)
Sales and other, net 0.3 0.1 4.4 (3.2)
Change in fair value - equity securities 2.2 5.2 0.3 5.7
Change in fair value and gains (losses) realized on settlements - derivatives
0.5 (0.8) (7.8) (1.7)
Net investment gains (losses)
$ 3.3 $ 3.8 $ (5.9) $ 0.1
From time to time, we may sell fixed maturity securities subsequent to the reporting date that were considered temporarily impaired at such reporting date. Such sales are due to issuer-specific events occurring subsequent to the reporting date that result in a change in our intent to sell a fixed maturity security.
Other Income
For the three and nine months ended September 30, 2025, other income decreased $0.9 million and increased $0.9 million, respectively.
Benefits, Claims and Settlement Expenses
For the three and nine months ended September 30, 2025, benefits, claims and settlement expenses decreased $20.3 million and $37.2 million due to lower catastrophe losses and underlying losses in the Property & Casualty segment as well as lower Life benefits related to assumption changes during the quarter.
Interest Credited
For the three and nine months ended September 30, 2025, interest credited increased $0.9 million and $1.2 million.
Under the deposit method of accounting, the interest credited on the reinsured annuity block continues to be reported. The average deferred annuity credited rate, excluding the reinsured annuity block, was 3.4% and 3.1% as of September 30, 2025 and September 30, 2024, respectively.
Operating Expenses
For the three and nine months ended September 30, 2025, operating expenses increased $13.4 million and $33.6 million, reflecting continued investments in growth and higher incentives driven by better than expected results.
Deferred Policy Acquisition Costs (DAC) Amortization Expense
For the three and nine months ended September 30, 2025, DAC amortization expense increased $3.4 million and $8.9 million, primarily due to premium increases in the Property & Casualty segment driving higher commission and underwriting expenses which increase DAC asset levels.
Intangible Asset Amortization Expense
For the three and nine months ended September 30, 2025, intangible asset amortization expense was flat with prior year.
Horace Mann Educators Corporation
Third Quarter 2025 Form 10-Q
Interest Expense
For the three and nine months ended September 30, 2025, interest expense increased $0.2 million and $0.3 million, respectively.
Income Tax Expense
The effective income tax rate on our pretax income, including net investment gains (losses), was 19.0% and 19.6% for the nine months ended September 30, 2025 and 2024, respectively. Income from investments in tax-advantaged securities decreased the effective income tax rates by 2.0 and 2.8 percentage points for the nine months ended September 30, 2025 and 2024, respectively. The effective tax rate for the nine months ended September 30, 2025 was further reduced by 1.2 percentage points due to purchases of transferable tax credits, which are expected to be used in the 2025 tax year. The company has outstanding commitments of $23.0 million related to such purchases as of September 30, 2025.
We record liabilities for uncertain tax filing positions where it is more likely than not that the position will not be sustainable upon audit by taxing authorities. These liabilities are reevaluated routinely and are adjusted appropriately based on changes in facts or law. We have no unrecorded liabilities from uncertain tax filing positions.
As of September 30, 2025, our federal income tax returns for years prior to 2021 are no longer subject to examination by the Internal Revenue Service. We do not anticipate any assessments for tax years that remain subject to examination to have a material effect on our financial position or results of operations.
On July 4, 2025, the One Big Beautiful Bill Act was signed into U.S. law, introducing a broad range of business tax reform. The Company does not expect the new legislation to have a material impact on its ongoing effective tax rate or financial condition.
Outlook for 2025
The following discussion provides outlook information for our results of operations and capital position.
Consolidated Results
At the time of issuance of this Quarterly Report on Form 10-Q, we estimate that 2025 full year core earnings* will be within a range of $4.50 to $4.70 per diluted share, generating a core return on equity* of over 10%. These results anticipate the following:
•Property & Casualty segment target profitability of Auto in the mid-90s Combined Ratio and Property at a 90 or below Combined ratio with ~$65 million of catastrophe losses
•Life & Retirement segment long-term target net interest spread between 220 and 230 bps and mortality in line with actuarial assumptions
•Supplemental & Group Benefits segment target blended benefit ratio of 39%
•Net investment income between $473 million and $477 million pre-tax, or $373-$377 million excluding the accreted investment income on the deposit asset on reinsurance in the Life & Retirement segment
•Approximately $40 million to $45 million in corporate Interest expense and other items included in results for the Corporate & Other segment
As described in Application of Critical Accounting Estimates, certain of our significant accounting measurements require the use of estimates and assumptions. As additional information becomes available, adjustments may be required. Those adjustments are charged or credited to net income for the period in which the adjustments are made and may impact actual results compared to our estimates above. Additionally, see forward-looking information in this Quarterly Report on Form 10-Q as well as Part I - Items 1 and 1A in our Annual Report on Form 10-K for the year ended December 31, 2024 concerning other important factors that could impact actual results. Our projections due not include a forecast of net investment gains (losses), which can vary substantially from one period to another and may have a significant impact on net income.
Horace Mann Educators Corporation
Third Quarter 2025 Form 10-Q
Application of Critical Accounting Estimates
The preparation of consolidated financial statements in conformity with GAAP requires us to make estimates and assumptions based on information available at the time the consolidated financial statements are prepared. These estimates and assumptions affect the reported amounts of our consolidated assets, liabilities, shareholders' equity and net income. Certain accounting estimates are particularly sensitive because of their significance to our consolidated financial statements and because of the possibility that subsequent events and available information may differ markedly from management's judgments at the time the consolidated financial statements were prepared. We have discussed with the Audit Committee the quality, not just the acceptability, of our accounting principles as applied in our financial reporting. The discussions generally included such matters as the consistency of our accounting policies and their application, and the clarity and completeness of our consolidated financial statements, which include related disclosures.
Information regarding our accounting policies pertaining to these topics is located in the Notes to the Consolidated Financial Statements contained in Part II - Item 8 of our Annual Report on Form 10-K for the year ended December 31, 2024. In addition, discussion of accounting policies, including certain sensitivity information, was presented in Management's Discussion and Analysis of Financial Condition and Results of Operations - Application of Critical Accounting Estimates in that Form 10-K within which we identified the following accounting estimates as critical in that they involve a higher degree of judgment and are subject to a significant degree of variability:
•Valuation of hard-to-value fixed maturity securities
•Evaluation of credit loss impairments for fixed maturity securities
•Valuation of future policy benefit reserves
•Valuation of liabilities for property and casualty unpaid claims and claim expense reserves
Compared to December 31, 2024, as of September 30, 2025, there were no material changes to accounting policies for areas most subject to significant management judgments identified above.
Horace Mann Educators Corporation
Third Quarter 2025 Form 10-Q
Results of Operations by Segment
Consolidated financial results reflect the results of the Property & Casualty, Life & Retirement, and Supplemental & Group Benefits reporting segments, as well as the Corporate & Other reporting segment. These segments are defined based on financial information management uses to evaluate performance and to determine the allocation of resources. The following sections provide analysis and discussion of the results of operations for each of the reporting segments as well as investment results.
Property & Casualty
The Property & Casualty segment primarily markets private passenger auto insurance and residential home insurance. Horace Mann offers standard auto coverages, including liability, collision and comprehensive. Property coverage includes both homeowners and renters policies. For both auto and property coverage, Horace Mann offers educators a discounted rate and the Educator Advantage® package of features. The Property & Casualty segment represented 49% of total revenues in 2024.
(All comparisons vs. same periods in 2024, unless noted otherwise)
For the three and nine months ended September 30, 2025, net income reflected the following factors:
•Increases in average written premium per policy
•Lower underlying loss ratio*
•Catastrophe losses lower than prior year by 13.3 points and 7.5 points for the three and nine months, respectively
•Higher net investment income driven by limited partnership portfolio and the fixed income portfolio
Horace Mann Educators Corporation
Third Quarter 2025 Form 10-Q
The following table provides certain financial information for Property & Casualty for the periods indicated.
($ in millions, unless otherwise indicated) Three Months Ended
September 30, 		2025-2024 Nine Months Ended
September 30, 		2025-2024
2025 2024 % Change 2025 2024 % Change
Underwriting Results
Net premiums written* $ 232.1 $ 212.3 9.3 % $ 628.8 $ 583.6 7.7 %
Net premiums earned
204.7 187.3 9.3 % 594.7 539.7 10.2 %
Losses and loss adjustment expenses
Current accident year before catastrophe losses 116.4 113.7 2.4 % 335.9 340.3 -1.3 %
Current accident year catastrophe losses 9.9 34.0 -70.9 % 56.0 91.1 -38.5 %
Prior years' reserve development(1)
(3.0) (13.0) N.M. (13.8) (19.2) N.M.
Total losses and loss adjustment expenses 123.3 134.7 -8.5 % 378.1 412.2 -8.3 %
Operating expenses, including DAC amortization expense 56.5 48.8 15.8 % 165.6 144.2 14.8 %
Underwriting gain (loss) 24.9 3.8 N.M. 51.0 (16.7) N.M.
Net investment income 14.8 8.8 68.2 % 41.4 30.6 35.3 %
Other income 0.6 0.6 - % 2.6 1.9 36.8 %
Income (loss) before income taxes 40.3 13.2 205.3 % 95.0 15.8 501.3 %
Income tax expense (benefit) 8.5 2.6 226.9 % 19.9 3.2 521.9 %
Net income (loss)
31.8 10.6 200.0 % 75.1 12.6 496.0 %
Core earnings (loss)* 31.8 10.6 200.0 % 75.1 12.6 496.0 %
Operating Statistics:
Auto
Net premiums written*
$ 131.6 $ 129.1 1.9 % $ 379.9 $ 368.1 3.2 %
Loss and loss adjustment expense ratio
67.4 % 66.4 % 1.0 pts 68.2 % 70.1 % -1.9 pts
Expense ratio 28.3 % 26.4 % 1.9 pts 28.2 % 26.7 % 1.5 pts
Combined ratio: 95.7 % 92.8 % 2.9 pts 96.4 % 96.8 % -0.4 pts
Prior years' reserve development(1)
-0.1 % -6.7 % 6.6 pts -1.1 % -4.4 % 3.3 pts
Catastrophe losses 0.9 % 1.6 % -0.7 pts 1.9 % 2.0 % -0.1 pts
Underlying combined ratio*
94.9 % 97.9 % -3.0 pts 95.6 % 99.2 % -3.6 pts
Property (excludes other liability)
Net premiums written*
$ 99.2 $ 82.5 20.2 % $ 247.0 $ 214.7 15.0 %
Loss and loss adjustment expense ratio
48.8 % 81.6 % -32.8 pts 55.6 % 86.9 % -31.3 pts
Expense ratio 26.5 % 25.5 % 1.0 pts 27.5 % 26.8 % 0.7 pts
Combined ratio: 75.3 % 107.1 % -31.8 pts 83.1 % 113.7 % -30.6 pts
Prior years' reserve development(1)
-3.6 % -7.4 % 3.8 pts -4.4 % -2.6 % -1.8 pts
Catastrophe losses 11.2 % 47.6 % -36.4 pts 22.0 % 43.9 % -21.9 pts
Underlying combined ratio*
67.7 % 66.9 % 0.8 pts 65.5 % 72.4 % -6.9 pts
Household retention-LTM
Auto
83.7 % 86.6 % -2.9 pts
Property
88.7 % 90.1 % -1.4 pts
(1) (Favorable) unfavorable.
Horace Mann Educators Corporation
Third Quarter 2025 Form 10-Q
The Property & Casualty segment three and nine month net income of $31.8 million and $75.1 million, as well as the three month and six month combined ratio of 87.8% and 91.4%, respectively, reflected improved current year underlying results and catastrophe losses below prior year and recent prior periods.
The current quarter reflects an increase in net premiums written* of 9.3%, with average written premiums* rising for both property and auto. Sales* were steady for the quarter, up 5.4% from the prior year, and household retention remains in line with expectations.
The three and nine month loss ratios decreased 11.7 and 12.8 points from last year reflecting higher average premiums and catastrophe losses that were below recent prior periods. In addition, $3.0 million and $13.8 million of net favorable prior years' reserve development for the three and nine months reduced the loss ratio 1.5 and 2.3 points, respectively. Catastrophe losses for the quarter were $9.9 million, pretax, contributing 4.8 points to the combined ratio. In total, there were 14 events designated as catastrophes by Property Claims Services (PCS) in this year's third quarter. The lower catastrophe losses are driven by lower frequency and severity of policyholder claims. In the third quarter of 2024, catastrophe losses were $34.0 million, pretax, contributing 18.1 points to the combined ratio, from 20 PCS events.
The year-over-year increase in average written premiums* for auto policies remained elevated in the third quarter at 6.6%, with retention consistent with the second quarter, and in line with expectations, given the rate actions the Company has taken. The third-quarter auto underlying loss ratio* was 66.6%, improving 4.9 points from the prior year quarter, reflecting the benefit of higher average earned premium. The third quarter reported loss ratio benefited 0.2 points from favorable prior years' reserve development.
The year-over-year increase in average written premiums* for property policies was 13.8% in the third quarter, as rate increases and inflation adjustments to coverage values continue to take effect. Policyholder retention remains strong. The third-quarter property underlying loss ratio* was 41.2%, a 0.2 point decrease from prior year reflecting the increase in average earned premium*. The third quarter reported loss ratio benefited 3.6 points from favorable prior years' reserve development.
Horace Mann Educators Corporation
Third Quarter 2025 Form 10-Q
Life & Retirement
The Life & Retirement segment markets 403(b) tax-qualified fixed, fixed indexed and variable annuities; the Horace Mann Retirement Advantage® open architecture platform for 403(b)(7) and other defined contribution plans; and other retirement products to educators as well as traditional term and whole life insurance products. Horace Mann is one of the largest participants in the K-12 educator portion of the 403(b) tax-qualified annuity market, measured by 403(b) net premiums written on a statutory accounting basis. The Life & Retirement segment represented 34% of total revenues in 2024.
(All comparisons vs. same periods in 2024, unless noted otherwise)
For the three and nine months ended September 30, 2025, net income reflected the following factors:
•Benefits expense in Life decreased due to annual assumption updates related to mortality for both comparisons
•Annualized quarterly and nine month net interest spread on fixed annuities up 3 basis points and 28 basis points, respectively
•Higher operating expenses due to growth
Horace Mann Educators Corporation
Third Quarter 2025 Form 10-Q
The following table provides certain information for Life & Retirement for the periods indicated.
($ in millions) Three Months Ended
September 30, 		2025-2024 Nine Months Ended
September 30, 		2025-2024
2025 2024 % Change 2025 2024 % Change
Life & Retirement
Net premiums written and contract deposits* $ 170.4 $ 155.8 9.4 % $ 452.4 $ 421.0 7.5 %
Revenues
Net premiums and contract charges earned
39.2 39.1 0.3 % 117.3 114.9 2.1 %
Net investment income(1)
94.0 94.6 -0.6 % 273.5 269.3 1.6 %
Other income
6.1 5.3 15.1 % 15.8 14.7 7.5 %
Total revenues 139.3 139.0 0.2 % 406.6 398.9 1.9 %
Benefits and Expenses
Benefits and change in reserves 28.6 35.2 -18.8 % 90.8 96.1 -5.5 %
Interest credited
54.2 53.6 1.1 % 157.3 158.0 -0.4 %
Operating expenses 30.0 26.1 14.9 % 87.5 78.6 11.3 %
DAC amortization expense 5.9 5.9 - % 17.6 18.6 -5.4 %
Intangible asset amortization expense 0.1 0.1 N.M. 0.2 0.2 N.M.
Total benefits and expenses
118.8 120.9 -1.7 % 353.4 351.5 0.5 %
Income before income taxes 20.5 18.1 13.3 % 53.2 47.4 12.2 %
Income tax expense 3.6 3.3 9.1 % 9.5 8.6 10.5 %
Net income 16.9 14.8 14.2 % 43.7 38.8 12.6 %
Core earnings*
15.1 15.1 - % 47.6 37.3 27.6 %
Life policies in force (in thousands) 161 161 - %
Life insurance in force $ 21,387 $ 20,903 2.3 %
Life persistency - LTM 95.9 % 96.0 % -0.1 pts
Annuity contracts in force (in thousands) 214 218 -1.8 %
Horace Mann Retirement Advantage®contracts in force (in thousands)
23 21 9.5 %
Cash value persistency - LTM 92.0 % 91.5 % 0.5 pts
(1)In the second quarter of 2025, the Company recorded a reduction in net investment income due to an immaterial out-of-period correction of an error. See additional disclosure contained in Note 1 of the September 30, 2025 Form 10-Q.
Life & Retirement segment net income for the three and nine months ended September 30, 2025, of $16.9 million and $43.7 million was up 14.2% and 12.6%, primarily due to favorable benefits in the Life segment for both comparisons and higher net investment income for the nine month comparison. Life benefits reflected favorable assumption changes related to mortality costs in the current quarter compared to the prior year. On a year-to-date basis, mortality costs remain within our expected actuarial range. The net spread increase reflects lower borrowing costs and increased advances from our FHLB funding agreements compared with 2024. Excluding the reduction in net investment income due to an immaterial out-of-period correction of an error of $6.7 million ($5.3 million after tax), net investment income increased $10.9 million for the nine months ended September 30, 2025.
For the Retirement business, net annuity contract deposits were up 9.3% for the quarter at $138.6 million. Educators continue to begin their relationship with Horace Mann through 403(b) retirement savings products, which provide encouraging cross-sell opportunities. Average persistency rose from the prior period to 92.0%.
Horace Mann currently has $5.9 billion in annuity assets under management, including $2.2 billion of fixed annuities, $3.3 billion of variable annuities and $0.4 billion of fixed indexed annuities. Assets under administration, which includes Horace Mann Retirement Advantage®and other advisory and recordkeeping assets, were up due to the effect of equity market performance on assets.
Life annualized sales* were $2.9 million for the quarter. Persistency remains strong. Life insurance in force rose to $21.4 billion at quarter-end.
Horace Mann Educators Corporation
Third Quarter 2025 Form 10-Q
We actively manage our interest rate risk exposure, considering a variety of factors, including earned interest rates, credited interest rates and the relationship between the expected durations of assets and liabilities. We estimate that over the next 12 months approximately $833.6 million of the Life & Retirement investment portfolio and related investable cash flows will be reinvested at current market rates.
As a general guideline, based on our existing policies and investment portfolio, the impact from a 100 basis point decline in the average reinvestment rate would reduce Life & Retirement net investment income by approximately $2.6 million in year one, reducing the annualized net interest spread on fixed annuities by approximately 10 basis points, compared to the current period annualized net interest spread on fixed annuities. We could also consider potential changes in rates credited to policyholders, tempered by any restrictions on the ability to adjust policyholder rates due to guaranteed minimum crediting rates.
Supplemental & Group Benefits
The Supplemental & Group Benefits segment markets group solutions for districts and other public employers, as well as individual supplemental products typically distributed through the employer channel. The Supplemental & Group Benefits segment provides group term life, disability and specialty health insurance, along with supplemental products including cancer, heart, hospital, supplemental disability and accident coverages. The Supplemental & Group Benefits segment represented 18% of total revenues in 2024.
(All comparisons vs. same periods in 2024, unless noted otherwise)
For the three and nine months ended September 30, 2025, net income reflected the following factors:
•Higher premium earned reflecting investment to grow the book of business
•Lower benefits ratio for Group Benefits for the quarter and higher benefits ratio for the year
•Higher operating expenses due to investment in growth
Horace Mann Educators Corporation
Third Quarter 2025 Form 10-Q
The following table provides certain information for Supplemental & Group Benefits for the periods indicated.
($ in millions) Three Months Ended
September 30, 		2025-2024 Nine Months Ended
September 30, 		2025-2024
2025 2024 % Change 2025 2024 % Change
Supplemental & Group Benefits
Revenues
Net premiums and contract charges earned $ 66.4 $ 62.7 5.9 % $ 199.2 $ 190.6 4.5 %
Net investment income(1)
11.1 10.1 9.9 % 27.6 28.4 -2.8 %
Other income (1.9) (0.4) -375.0 % (4.9) (4.6) -6.5 %
Total revenues
75.6 72.4 4.4 % 221.9 214.4 3.5 %
Benefits and Expenses
Benefits, settlement expenses and change in reserves
20.6 22.6 -8.8 % 72.7 70.1 3.7 %
Operating expenses (including DAC amortization expense)
32.5 27.5 18.2 % 95.1 82.8 14.9 %
Intangible asset amortization expense 3.5 3.5 - % 10.6 10.7 -0.9 %
Total benefits and expenses
56.6 53.6 5.6 % 178.4 163.6 9.0 %
Income before income taxes 19.0 18.8 1.1 % 43.5 50.8 -14.4 %
Income tax expense
4.0 4.0 - % 9.4 10.9 -13.8 %
Net income 15.0 14.8 1.4 % 34.1 39.9 -14.5 %
Core earnings*
17.7 17.6 0.6 % 45.1 48.4 -6.8 %
Benefits ratio
30.9 % 36.0 % -5.1 pts 36.5 % 36.8 % -0.3 pts
Operating expense ratio
43.1 % 37.9 % 5.2 pts 42.9 % 38.6 % 4.3 pts
Pretax profit margin
25.1 % 26.0 % -0.9 pts 19.6 % 23.7 % -4.1 pts
Individual supplemental products benefits ratio
25.4 % 27.8 % -2.4 pts 27.1 % 28.9 % -1.8 pts
Individual supplemental premium persistency
(rolling beginning 12 months)
89.6 % 90.8 % -1.2 pts 89.6 % 90.8 % -1.2 pts
Group benefits products benefits ratio
35.7 % 43.6 % -7.9 pts 44.7 % 43.9 % 0.8 pts
Group benefits covered lives (in thousands)
865 842 2.7 %
(1)In the second quarter of 2025, the Company recorded a reduction in net investment income due to an immaterial out-of-period correction of an error. See additional disclosure contained in Note 1 of the September 30, 2025 Form 10-Q.
Supplemental & Group Benefits segment net income for the three and nine months ended September 30, 2025, of $15.0 million and $34.1 million, was up $0.2 million and down $5.8 million, respectively. The Individual Supplemental benefits ratio decreased 2.4 points and 1.8 points for the three and nine months ended as we continue to see favorable policyholder utilization trends relative to our long-term expectations. The Group Benefits benefit ratio decreased 7.9 points and increased 0.8 points for the three and nine months due to favorable policy utilization during the quarter and slightly elevated for the year. Operating expense increase reflects inflation and investments being made in growth initiatives and infrastructure.
Excluding the reduction in net investment income due to an immaterial out-of-period correction of an error of $3.5 million ($2.8 million after tax), net investment income increased $2.7 million for the nine months ended September 30, 2025.
Total sales* for the three and nine months ended September 30, 2025 increased $4.7 million with Individual Supplemental product sales increasing $1.7 million and Group Benefits products increasing $3.0 million. Individual Supplemental sales increased 40.5% and Group Benefits sales increased 90.9% due to our strategic investments to drive growth. Variability in sales between comparable periods is typical for Group Benefits given the relatively small scale and the longer sales cycle of this business. Persistency remains strong for the segment.
Horace Mann Educators Corporation
Third Quarter 2025 Form 10-Q
Corporate & Other
(All comparisons vs. same periods in 2024, unless noted otherwise)
The following table provides certain financial information for Corporate & Other for the periods indicated.
($ in millions) Three Months Ended
September 30, 		2025-2024 Nine Months Ended
September 30, 		2025-2024
2025 2024 % Change 2025 2024 % Change
Revenues
Total revenues 0.2 0.2 - % 5.3 0.6 N.M.
Expenses
Interest expense $ 8.9 $ 8.7 2.3 % $ 26.4 $ 26.1 1.1 %
Other operating expenses
2.9 2.7 7.4 % 9.2 8.3 10.8 %
Total expenses
11.8 11.4 3.5 % 35.6 34.4 3.5 %
Loss before income taxes (11.6) (11.2) -3.6 % (30.3) (33.8) 10.4 %
Income tax benefit (3.5) (2.3) -52.2 % (7.9) (7.0) -12.9 %
Core loss* after tax (8.1) (8.9) 9.0 % (22.4) (26.8) 16.4 %
Net investment gains (losses), pretax
3.3 3.8 N.M. (5.9) 0.1 N.M.
Tax on net investment gains (losses)
0.6 0.8 N.M. (1.3) - N.M.
Net investment gains (losses), after tax
2.7 3.0 N.M. (4.6) 0.1 N.M.
Net loss (5.4) (5.9) 8.5 % (27.0) (26.7) -1.1 %
For the three and nine months ended September 30, 2025, the net results increased $0.5 million and $0.3 million, respectively.
Investment Results
(All comparisons vs. same periods in 2024, unless noted otherwise)
Our investment strategy is primarily focused on generating income to support product liabilities, and balances principal protection and risk. Total net investment income includes net investment income from our managed investment portfolio as well as accreted investment income from the deposit asset on reinsurance related to the company's reinsurance of policy liabilities related to legacy individual annuities written in 2002 or earlier.
($ in millions) Three Months Ended
September 30, 		2025-2024 Nine Months Ended
September 30, 		2025-2024
2025 2024 % Change 2025 2024 % Change
Net investment income - managed investment portfolio $ 96.4 $ 87.2 10.6 % $ 273.6 $ 249.8 9.5 %
Investment income - deposit asset on reinsurance 23.2 25.8 -10.1 % 72.7 77.0 -5.6 %
Total net investment income(1)
119.6 113.0 5.8 % 346.3 326.8 6.0 %
Pretax net investment gains (losses)
3.3 3.8 -13.2 % (5.9) 0.1 N.M
Pretax net unrealized investment losses on fixed maturity securities
(319.0) (301.8) N.M
(1)In the second quarter of 2025, the Company recorded a reduction in net investment income due to an immaterial out-of-period correction of an error. See additional disclosure contained in Note 1 of the September 30, 2025 Form 10-Q.
For the three and nine months ended September 30, 2025, net investment income from our managed investment portfolio increased $9.2 million and $23.8 million. The increase was primarily driven by higher returns in limited partnerships and core fixed performance. The investment yield on the portfolio excluding limited partnership interests was 4.6%, with new money yields continuing to exceed portfolio yields in the core fixed maturity securities portfolio.
For the three and nine months ended September 30, 2025, pretax net investment losses increased $0.5 million and $6.0 million. The increase was due to realized losses on equity securities.
Horace Mann Educators Corporation
Third Quarter 2025 Form 10-Q
Pretax net unrealized investment losses on fixed maturity securities as of September 30, 2025 were down $135.5 million, or 29.8%, compared to December 31, 2024, primarily due to a decrease of 42 basis points in US Treasury rates and investment-grade credit spreads that were tighter by 6 basis points.
Fixed Maturity and Equity Securities Portfolios
The table below presents our fixed maturity and equity securities portfolios by major asset class, including the 10 largest sectors of our corporate bond holdings (based on fair value).
($ in millions) September 30, 2025
Number of
Issuers 		Fair
Value 		Amortized
Cost, net 		Pretax Net
Unrealized
Loss
Fixed maturity securities
Corporate bonds
Banking & Finance 159 $ 361.1 $ 387.6 $ (26.5)
Insurance 55 145.8 155.7 (9.9)
Energy 93 140.4 149.1 (8.7)
Utilities 86 136.7 151.9 (15.2)
HealthCare,Pharmacy 77 131.8 149.8 (18.0)
Real Estate 37 86.4 91.2 (4.8)
Transportation 43 73.8 79.8 (6.0)
Consumer Products 56 67.3 81.6 (14.3)
Natural Gas 19 59.3 64.5 (5.2)
Technology 38 58.3 62.9 (4.6)
All other corporates(1)
312 580.9 616.9 (36.0)
Total corporate bonds 975 1,841.8 1,991.0 (149.2)
Mortgage-backed securities
U.S. Government and federally sponsored agencies 247 632.3 663.9 (31.6)
Commercial(2)
163 338.8 355.2 (16.4)
Other 88 84.3 84.0 0.3
Municipal bonds(3)
586 1,198.2 1,263.9 (65.7)
Government bonds
U.S. 44 359.9 415.5 (55.6)
Foreign 3 13.5 14.1 (0.6)
Collateralized loan obligations(4)
397 901.1 899.5 1.6
Asset-backed securities 153 296.6 298.4 (1.8)
Total fixed maturity securities 2,656 $ 5,666.5 $ 5,985.5 $ (319.0)
Equity securities
Non-redeemable preferred stocks 15 $ 42.6
Common stocks 5 1.7
Closed-end fund - -
Total equity securities 20 $ 44.3
Total 2,676 $ 5,710.8
(1)The All other corporates category contains 21 additional industry sectors. Retail, Food & Beverage, Industry- Manufacturing, Telecommunications, Leisure-Entertainment represented $191.9 million of fair value at September 30, 2025, with the remaining 16 sectors each representing less than $32.0 million.
(2)At September 30, 2025, 100% were investment grade, with an overall credit rating of AA, and the positions were well diversified by property type, geography and sponsor.
(3)Holdings are geographically diversified, 41.4% are tax-exempt and 77.3% are revenue bonds tied to essential services, such as mass transit, water and sewer. The overall credit quality of the municipal bond portfolio was AA- at September 30, 2025.
(4) Based on fair value, 99.9% of the collateralized loan obligation securities were rated investment grade based on ratings assigned by a nationally recognized statistical ratings organization (NRSRO- S&P, Moody's, Fitch, Dominion, A.M. Best, Morningstar, Egan Jones).
As of September 30, 2025, our diversified fixed maturity securities portfolio consisted of 4,018 investment positions, issued by 2,656 entities, and totaled approximately $5.7 billion in fair value. This portfolio was 97.4% investment grade, based on fair value, with an average quality rating of A+. Our investment guidelines target
Horace Mann Educators Corporation
Third Quarter 2025 Form 10-Q
single corporate issuer concentrations to 0.5% of invested assets for AAA or AA rated securities, 0.35% of invested assets for A or BBB rated securities, and $5.0 million for non-investment grade securities.
Rating of Fixed Maturity Securities and Equity Securities(1)
The following table presents the composition and fair value of our fixed maturity and equity securities portfolios by rating category. As of September 30, 2025, 95.1% of these combined portfolios were investment grade, based on fair value, with an overall average quality rating of A+. We have classified the entire fixed maturity securities portfolio as available for sale, which is carried at fair value.
($ in millions) Percent of Portfolio
Fair Value 		September 30, 2025
December 31, 2024 September 30, 2025 Fair
Value 		Amortized
Cost, net
Fixed maturity securities
AAA
11.9 % 11.8 % $ 666.6 $ 679.3
AA(2)
42.3 43.0 2,435.7 2,626.3
A
19.7 20.5 1,163.2 1,199.6
BBB
21.2 20.0 1,135.6 1,201.9
BB
1.3 1.4 77.0 81.0
B
0.5 0.6 33.1 32.8
CCC or lower
0.1 - 1.9 2.9
Not rated(3)
3.0 2.7 153.4 161.7
Total fixed maturity securities
100.0 % 100.0 % $ 5,666.5 $ 5,985.5
Equity securities
AAA
- % - % $ -
AA
- - -
A
- - -
BBB
77.3 69.1 30.6
BB
16.2 21.2 9.4
B
0.2 0.2 0.1
CCC or lower
- - -
Not rated
6.3 9.5 4.2
Total equity securities
100.0 % 100.0 % $ 44.3
Total
$ 5,710.8
(1)Ratings are assigned by an NRSRO when available, If no rating is available from an NRSRO, then an internally developed rating may be used. Ratings for publicly traded securities are determined when the securities are acquired and are updated monthly to reflect any changes in ratings.
(2)At September 30, 2025, the AA rated fair value amount included $359.6 million of U.S. Government and federally sponsored agency securities and $631.4 million of mortgage-backed and other asset-backed securities issued by U.S. Government and federally sponsored agencies.
(3)This category primarily represents private placement and municipal securities not rated by a NRSRO.
As of September 30, 2025, the fixed maturity securities portfolio had $395.2 million of pretax gross unrealized investment losses on $3,095.0 million of fair value related to 2,135 positions. Of the investment positions with gross unrealized losses, there were 363 trading below 80.0% of the carrying value as of September 30, 2025. The Company views the decrease in fair value of all of the fixed maturity securities with unrealized losses as of September 30, 2025 as due to factors other than a credit loss. Future changes in circumstances related to these and other securities could require subsequent recognition of impairment. See Part II - Item 8, Note 2 of the Consolidated Financial Statements in this Quarterly Report on Form 10-Q for more information.
Unrealized investment losses declined primarily due to a decrease in US Treasury rates. As of September 30, 2025, the 10-year U.S. Treasury yield decreased 42 basis points since December 31, 2024, declining from 4.57% as of December 31, 2024 to 4.15% as of September 30, 2025. Credit spreads were only slightly tighter during the same time period for investment grade by 6 basis points, while high yield was wider by 6 bps. As of September 30, 2025, investment grade and high yield total returns were up 6.88% and 7.22%, respectively, since December 31, 2024.
Horace Mann Educators Corporation
Third Quarter 2025 Form 10-Q
Liquidity and Capital Resources
Our liquidity and access to capital were not materially impacted by inflation or changes in interest rates during the three and nine months ended September 30, 2025. For further discussion regarding the potential future impacts of inflation and changes in interest rates, see Part I - Item 1A - Risk Factors and Part II - Item 7 - Management's Discussion and Analysis of Financial Condition and Results of Operations - Effects of Inflation and Changes in Interest Rates presented in our Annual Report on Form 10-K for the year ended December 31, 2023.
Investments
Information regarding our investment portfolio, which is comprised primarily of investment grade fixed maturity securities, is presented in Part I - Item 1, Note 2 of the Consolidated Financial Statements as well as Part I - Item 2 - Investment Results in this Quarterly Report on Form 10-Q.
Cash Flow
Our short-term liquidity requirements, within a 12 month operating cycle, are for the timely payment of claims and benefits to policyholders, operating expenses, interest payments and federal income taxes. Cash flow generated from operations has been, and is expected to be, adequate to meet our operating cash needs in the next 12 months. Cash flow in excess of operational needs has been used to fund business growth, pay dividends to shareholders and repurchase shares of our common stock. Long-term liquidity requirements, beyond one year, are principally for the payment of future insurance and annuity policy claims and benefits, as well as retirement of debt. The following table summarizes our consolidated cash flows activity for the periods indicated.
($ in millions) Nine Months Ended
September 30, 		2025-2024
2025 2024 % Change
Net cash provided by operating activities $ 423.3 $ 258.6 63.7 %
Net cash used in investing activities (234.6) (131.4) -78.5 %
Net cash provided by (used in) financing activities 75.7 (117.1) 164.6 %
Net increase in cash and restricted cash 264.4 10.1 N.M.
Cash and restricted cash at beginning of period 38.1 29.7 28.3 %
Cash and restricted cash at end of period $ 302.5 $ 39.8 660.1 %
Operating Activities
As a holding company, we conduct our principal operations in the personal lines segment of the property and casualty, life, retirement, supplemental and group insurance industries through our subsidiaries. Our insurance subsidiaries generate cash flow from premium and investment income, generally well in excess of their immediate needs for policy obligations, operating expenses and other cash requirements. Fluctuations in net cash provided by operating activities primarily reflect seasonality in timing of premium and investment income collections and claims and benefits payments.
For the nine months ended September 30, 2025, net cash provided by operating activities increased $164.7 million.
Investing Activities
Net cash used in investing activities for the nine months ended September 30, 2025 and 2024 was $(234.6) million and $(131.4) million, respectively.
Investing cash inflows consist primarily of proceeds from the sales and maturities of investments. Investing cash outflows consist primarily of payments for purchases of investments. Our investment strategy is to appropriately match the cash flows and durations of our assets with the cash flows and durations of our liabilities to meet the funding requirements of our business and, generally, the expected principal and interest payments produced by our fixed maturity securities portfolio adequately fund the estimated runoff of our insurance reserves. When market opportunities arise, we may sell selected securities and reinvest the proceeds to improve the yield and credit quality of our portfolio. We may at times also sell selected securities and reinvest the proceeds to improve
Horace Mann Educators Corporation
Third Quarter 2025 Form 10-Q
the duration matching of our assets and liabilities and/or rebalance our portfolio. As a result, sales before maturity may vary from period to period. The sale and purchase of short-term investments is influenced by proceeds received from FHLB funding advances, issuance of debt, our reverse repurchase agreement program, and by the amount of cash which is at times held in short-term investments to facilitate the availability of cash to fund the purchase of appropriate long-term investments, repay maturing debt, and/or to respond to catastrophes.
Financing Activities
Financing activities include primarily payment of dividends, receipt and withdrawal of funds by annuity contractholders, changes in the deposit asset on reinsurance, repurchases of our common stock, fluctuations in book overdraft balances, and borrowings, repayments and repurchases related to debt facilities.
For the nine months ended September 30, 2025, net cash provided in financing activities increased $192.8 million compared to the prior year period. The change was primarily due to $296.0 million from issuing Senior Notes described in the following paragraph, partially offset by a $68.0 million increase in cash outflows from the deposit asset on reinsurance, and a $57.0 million increase in net cash outflow from reverse repurchase agreements.
On September 26, 2025, the Company issued $300.0 million aggregate principal amount of 4.70% Senior Notes due October 1, 2030. The net proceeds will be used to fully repay the $250.0 million aggregate principal amount of 4.50% Senior Notes and accrued interest on October 14, 2025 and the remaining amount will be available for general corporate purposes.
The following table shows activity from FHLB funding agreements for the periods indicated.
($ in millions) Nine Months Ended
September 30, 		2025-2024 2025-2024
2025 2024 $ Change % Change
Balance at beginning of the period $ 989.5 $ 904.5 $ 85.0 9.4 %
Advances received from FHLB funding agreements
549.5 225.0 324.5 144.2 %
Principal repayments on FHLB funding agreements (499.5) (170.0) (329.5) 193.8 %
Balance at end of the period $ 1,039.5 $ 959.5 $ 80.0 8.3 %
Horace Mann Educators Corporation
Third Quarter 2025 Form 10-Q
Liquidity Sources and Uses
Our potential sources and uses of funds principally include the following activities:
Property & Casualty Life & Retirement Supplemental & Group Benefits Corporate & Other
Activities for potential sources of funds
Receipt of insurance premiums, contractholder charges and fees ☑ ☑ ☑
Recurring service fees, commissions and overrides ☑ ☑ ☑ ☑
Contractholder fund deposits ☑ ☑
Reinsurance and indemnification program recoveries ☑ ☑ ☑
Receipts of principal, interest and dividends on investments ☑ ☑ ☑ ☑
Proceeds from sales of investments ☑ ☑ ☑ ☑
Proceeds from FHLB borrowing and funding agreements ☑ ☑ ☑
Proceeds from reverse repurchase agreements ☑ ☑ ☑
Intercompany loans ☑ ☑ ☑ ☑
Capital contributions from parent ☑ ☑ ☑
Dividends or return of capital from subsidiaries ☑
Tax refunds/settlements ☑ ☑ ☑ ☑
Proceeds from periodic issuance of additional securities ☑
Proceeds from debt issuances ☑
Proceeds from revolving credit facility ☑
Receipt of intercompany settlements related to employee benefit plans ☑
Activities for potential uses of funds
Payment of claims and related expenses ☑ ☑ ☑
Payment of contract benefits, surrenders and withdrawals ☑ ☑
Reinsurance cessions and indemnification program payments ☑ ☑ ☑
Payment of operating costs and expenses ☑ ☑ ☑ ☑
Payments to purchase investments ☑ ☑ ☑ ☑
Repayment of FHLB borrowing and funding agreements ☑ ☑ ☑
Repayment of reverse repurchase agreements ☑ ☑ ☑
Payment or repayment of intercompany loans ☑ ☑ ☑ ☑
Capital contributions to subsidiaries ☑
Dividends or return of capital to shareholders/parent company ☑ ☑ ☑ ☑
Tax payments/settlements ☑ ☑ ☑ ☑
Common share repurchases ☑
Debt service expenses and repayments ☑
Repayment on revolving credit facility ☑
Payments related to employee benefit plans ☑
Payments for business acquisitions ☑
We actively manage our financial position and liquidity levels in light of changing market, economic and business conditions. Liquidity is managed at both the entity and enterprise level across HMEC and is assessed on both base and stressed level liquidity needs. We believe we have sufficient liquidity to meet these needs. Additionally, we have existing intercompany agreements in place that facilitate liquidity management across HMEC to enhance flexibility.
Horace Mann Educators Corporation
Third Quarter 2025 Form 10-Q
As of September 30, 2025, we held $1.3 billion of cash, U.S. government and agency fixed maturity securities and public equity securities (excluding non-redeemable preferred stocks and foreign equity securities) which, under normal market conditions, could be rapidly liquidated.
Certain remote events and circumstances could constrain our liquidity. Those events and circumstances include, for example, a catastrophe resulting in extraordinary losses, a downgrade of our Senior Notes rating to non-investment grade status or a downgrade in our insurance subsidiaries' financial strength ratings. The rating agencies also consider the interdependence of our individually rated entities; therefore, a rating change in one entity could potentially affect the ratings of other related entities.
Capital Resources
We have determined the amount of capital that is needed to adequately fund and support business growth, primarily based on risk-based capital formulas, including those developed by the National Association of Insurance Commissioners. Historically, our insurance subsidiaries have generated capital in excess of such needed levels. These excess amounts have been paid to us through dividends. We have then utilized these dividends and our access to the capital markets to fund growth initiatives, service and retire debt, pay dividends to our shareholders, repurchase shares of our common stock and for other corporate purposes. If necessary, we also have other potential sources of liquidity that could provide for additional funding to meet corporate obligations or pay shareholder dividends, including a revolving line of credit, reverse repurchase agreements program, as well as issuances of various securities.
The insurance subsidiaries are subject to various regulatory restrictions that limit the amount of annual dividends or other distributions, including loans or cash advances, available to us without prior approval of the insurance regulatory authorities. The aggregate amount of dividends that may be paid in 2025 from all of our insurance subsidiaries without prior regulatory approval is $145.7 million, excluding the impact and timing of prior dividends, of which $65.0 million was paid during the nine months ended September 30, 2025. We anticipate that our sources of capital will continue to generate sufficient capital to meet the needs for business growth, debt interest payments, shareholder dividends and our share repurchase programs. Additional information is contained in Part II - Item 8, Note 13 of the Consolidated Financial Statements in our Annual Report on Form 10-K for the year ended December 31, 2024.
Total capital was $2,284.2 million as of September 30, 2025, including $842.9 million of long-term debt. Total debt represented 36.9% of total capital including net unrealized investment losses on fixed maturity securities (26.9% excluding net unrealized investment losses on fixed maturity securities, net reserve remeasurements attributable to discount rates, and restricted cash for debt repayment*) as of September 30, 2025, which was above our long-term target of 25.0% for our debt to capital ratio excluding net unrealized investment gains (losses), net reserve remeasurements attributable to discount rates, and restricted cash for debt repayment reflecting the pending redemption of the 2015 Senior Notes in October.
Shareholders' equity was $1,441.3 million as of September 30, 2025, including net unrealized investment losses on fixed maturity securities of $250.8 million after taxes. The market value of our common stock and the market value per share were $1,843.5 million and $45.17, respectively, as of September 30, 2025. Book value per share and adjusted book value per share* was $35.31 and $39.51, respectively, as of September 30, 2025.
Additional information regarding net unrealized investment gains (losses) on fixed maturity securities as of September 30, 2025 is included in Part I - Item 1, Note 2 of the Consolidated Financial Statements as well as in Part I - Item 2 - Investment Results in this Quarterly Report on Form 10-Q.
Total dividends paid to shareholders was $42.9 million for the nine months ended September 30, 2025. In March, May, and September of 2025, the Board of Directors (Board) approved regular quarterly dividends of $0.35 per share.
For the nine months ended September 30, 2025, we repurchased 343,301 shares of our common stock under our share repurchase program for a total cost of $13.9, at an average price per share of $40.70. See Part II - Item 8, Note 12 of the Consolidated Financial Statements in our Annual Report on Form 10-K for the year ended December 31, 2024 for more information. As of September 30, 2025, $62.4 million remained authorized for future share repurchases under the share repurchase program.
Horace Mann Educators Corporation
Third Quarter 2025 Form 10-Q
The following table summarizes our debt obligations.
($ in millions) Interest
Rates 		Final
Maturity 		September 30, 2025 December 31, 2024
Short-term debt
Revolving Credit Facility Variable 2030 $ - $ -
Long-term debt(1)
4.70% 2025 Senior Notes, Aggregate principal amount of $300.0 less unaccrued discount of $1.6 and $0.0 unamortized debt issuance costs of $3.2 and $0.0
4.70% 2030 295.2 -
7.25% 2023 Senior Notes, Aggregate principal amount of $300.0 less unaccrued discount of $0.3 and $0.4 and unamortized debt issuance costs of $1.9 and $2.3
7.25% 2028 297.8 297.3
4.50% 2015 Senior Notes, Aggregate principal amount of $250.0 less unaccrued discount of $0.0 and $0.1 and unamortized debt issuance costs of $0.1 and $0.2
4.50% 2025 249.9 249.7
Total
$ 842.9 $ 547.0
(1) We designate debt obligations as "long-term" based on maturity date at issuance.
On September 26, 2025, we issued $300.0 million aggregate principal amount of 4.70% senior notes (2025 Senior Notes), which will mature on October 1, 2030, issued at a discount resulting in an effective yield of 4.82%. Interest on the 2025 Senior Notes is payable semi-annually at a rate of 4.70%. The 2025 Senior Notes are redeemable in whole or in part, at any time, at our option, at a redemption price equal to the greater of (1) 100% of the principal amount of the notes being redeemed or (2) the sum of the present values of the remaining scheduled payments of principal and interest thereon discounted, on a semi-annual basis, at the Treasury yield (as defined in the indenture) plus 20 basis points, plus, in either of the above cases, accrued interest up to, but not including the date of redemption. The 2025 Senior Notes are traded in the open market (HMN 4.70).
On September 15, 2023, we issued $300.0 million aggregate principal amount of 7.25% senior notes (2023 Senior Notes), which will mature on September 15, 2028, issued at a discount resulting in an effective yield of 7.29%. Interest on the 2023 Senior Notes is payable semi-annually at a rate of 7.25%. The 2023 Senior Notes are redeemable in whole or in part, at any time, at our option, at a redemption price equal to the greater of (1) 100% of the principal amount of the notes being redeemed or (2) the sum of the present values of the remaining scheduled payments of principal and interest thereon discounted, on a semi-annual basis, at the Treasury yield (as defined in the indenture) plus 45 basis points, plus, in either of the above cases, accrued interest up to, but not including the date of redemption. The 2023 Senior Notes are traded in the open market (HMN 7.25).
As of September 30, 2025, we had $325.0 million available on the Revolving Credit Facility, with an interest rate based on Term SOFR plus 115 basis points plus the applicable benchmark adjustment spread. The Revolving Credit Facility expires on May 19, 2030. The unused portion of the Revolving Credit Facility is subject to a variable commitment fee, which was 0.15% on an annual basis as of September 30, 2025.
As of September 30, 2025, we had outstanding $250.0 million aggregate principal amount of 4.50% senior notes (2015 Senior Notes), which will mature on December 1, 2025, issued at a discount resulting in an effective yield of 4.53%. Interest on the 2015 Senior Notes is payable semi-annually at a rate of 4.50%. Detailed information regarding the redemption terms of the 2015 Senior Notes is contained in the Part II - Item 8, Note 10 of the Consolidated Financial Statements in our Annual Report on Form 10-K for the year ended December 31, 2024. The 2015 Senior Notes are traded in the open market (HMN 4.50).
As of September 30, 2025, we had no borrowings outstanding with FHLB. The Board has authorized a maximum amount equal to 15% of net aggregate admitted assets less separate account assets of the insurance subsidiaries for FHLB borrowing and funding agreements which is below our maximum FHLB borrowing capacity.
We had no obligation for securities sold under reverse repurchase agreements at September 30, 2025 compared to $12.0 million as of December 31, 2024.
Horace Mann Educators Corporation
Third Quarter 2025 Form 10-Q
To provide additional capital management flexibility, we filed a "universal shelf" registration statement on Form S-3 with the Securities and Exchange Commission (SEC) on March 8, 2024. The registration statement, which registered the offer and sale from time to time of an indeterminate amount of various securities, which may include debt securities, common stock, preferred stock, depositary shares, warrants, delayed delivery contracts and/or units that include any of these securities, was automatically effective on March 8, 2024. Unless withdrawn by us earlier, this registration statement will remain effective through March 8, 2027. No securities associated with the registration statement have been issued at the time of issuance of this Quarterly Report on Form 10-Q.
On March 13, 2018, we filed a "shelf" registration statement on Form S-4 with the SEC which became effective on May 2, 2018. Under this registration statement, we may from time to time offer and issue up to 5,000,000 shares of our common stock in connection with future acquisitions of other businesses, assets or securities. Unless withdrawn by us, this registration statement will remain effective indefinitely. No securities associated with the registration statement have been issued at the time of issuance of this Quarterly Report on Form 10-Q.
Financial Ratings
Our principal insurance subsidiaries are rated by A.M. Best Company, Inc. (A.M. Best), Fitch, Moody's, and S&P. These rating agencies have also assigned ratings to our Senior Notes. The ratings that are assigned by these agencies, which are subject to change, can impact, among other things, our access to sources of capital, cost of capital, and competitive position. These ratings are not a recommendation to buy or hold any of our securities.
All four agencies currently have assigned the same insurance financial strength ratings to our Property & Casualty and Life insurance subsidiaries. Only A.M. Best currently rates our Supplemental & Group Benefits subsidiaries, each of which is rated at the same level as our Property & Casualty and Life & Retirement subsidiaries. Assigned ratings and respective affirmation/review dates as of October 31, 2025 were as follows:
Insurance Financial Affirmed/
Strength Ratings (Outlook) Debt Ratings (Outlook) Reviewed
A.M. Best
HMEC (parent company) N.A. bbb (stable)
9/12/2025
HMEC's Life & Retirement subsidiaries A (stable) N.A. 9/12/2025
HMEC's Property & Casualty subsidiaries A (stable) N.A.
9/12/2025
HMEC's Supplemental & Group Benefits
subsidiaries
Madison National Life Insurance Company
A
(stable) N.A. 9/12/2025
National Teachers Associates Life
Insurance Company
A (stable) N.A. 9/12/2025
Fitch
HMEC (parent company)
BBB
(stable)
8/15/2025
HMEC's Life Group
A
(stable)
8/15/2025
HMEC's P&C Group
A
(stable)
8/15/2025
Moody's
HMEC (parent company) Baa2
(stable)
3/26/2025
HMEC's Life Group A2
(stable)
3/26/2025
HMEC's P&C Group A2
(stable)
3/26/2025
S&P A (stable) BBB (stable)
1/27/2025
Reinsurance Programs
There have been no material changes in our reinsurance programs for our Property & Casualty, Life & Retirement and Supplemental & Group Benefits segments from that disclosed in Part I - Item 1, Reporting Segments in our Annual Report on Form 10-K for the year ended December 31, 2024.
Horace Mann Educators Corporation
Third Quarter 2025 Form 10-Q
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