Delaware | 37-0911756 | ||||
(State or other jurisdiction of incorporation or organization) | (I.R.S. Employer Identification No.) |
Securities registered pursuant to Section 12(b) of the Act: | ||||||||||||||
Title of each class | Trading Symbol(s) | Name of each exchange on which registered | ||||||||||||
Common Stock, $0.001 par value | HMN | New York Stock Exchange |
Large accelerated filer | Accelerated filer | ☐ | ||||||||||||||||
Non-accelerated filer | ☐ | Smaller reporting company | ☐ | |||||||||||||||
Emerging growth company | ☐ |
Page | ||||||||
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Item 2. | ||||||||
Item 3. | ||||||||
Item 4. | ||||||||
Item 1A. | ||||||||
Item 2. | ||||||||
Item 5. | ||||||||
Item 6. | ||||||||
/s/ KPMG LLP | |||||
KPMG LLP | |||||
Chicago, Illinois | |||||
November |
Horace Mann Educators Corporation | 1 | Quarterly Report on Form 10-Q |
September 30, 2017 | December 31, 2016 | |||||||
(Unaudited) | ||||||||
ASSETS | ||||||||
Investments | ||||||||
Fixed maturity securities, available for sale, at fair value (amortized cost 2017, $7,194,397; 2016, $7,152,127) | $ | 7,630,634 | $ | 7,456,708 | ||||
Equity securities, available for sale, at fair value (cost 2017, $140,200; 2016, $134,013) | 159,275 | 141,649 | ||||||
Short-term and other investments | 547,227 | 401,015 | ||||||
Total investments | 8,337,136 | 7,999,372 | ||||||
Cash | 6,692 | 16,670 | ||||||
Deferred policy acquisition costs | 257,214 | 267,580 | ||||||
Goodwill | 47,396 | 47,396 | ||||||
Other assets | 344,443 | 321,874 | ||||||
Separate Account (variable annuity) assets | 2,051,467 | 1,923,932 | ||||||
Total assets | $ | 11,044,348 | $ | 10,576,824 | ||||
LIABILITIES AND SHAREHOLDERS’ EQUITY | ||||||||
Policy liabilities | ||||||||
Investment contract and life policy reserves | $ | 5,540,045 | $ | 5,447,969 | ||||
Unpaid claims and claim expenses | 341,784 | 329,888 | ||||||
Unearned premiums | 262,029 | 246,274 | ||||||
Total policy liabilities | 6,143,858 | 6,024,131 | ||||||
Other policyholder funds | 717,369 | 708,950 | ||||||
Other liabilities | 493,810 | 378,620 | ||||||
Long-term debt | 247,403 | 247,209 | ||||||
Separate Account (variable annuity) liabilities | 2,051,467 | 1,923,932 | ||||||
Total liabilities | 9,653,907 | 9,282,842 | ||||||
Preferred stock, $0.001 par value, authorized 1,000,000 shares; none issued | — | — | ||||||
Common stock, $0.001 par value, authorized 75,000,000 shares; issued, 2017, 65,382,877; 2016, 64,917,683 | 65 | 65 | ||||||
Additional paid-in capital | 462,068 | 453,479 | ||||||
Retained earnings | 1,165,282 | 1,155,732 | ||||||
Accumulated other comprehensive income (loss), net of taxes: | ||||||||
Net unrealized investment gains on fixed maturity and equity securities | 255,718 | 175,738 | ||||||
Net funded status of benefit plans | (11,817 | ) | (11,817 | ) | ||||
Treasury stock, at cost, 2017, 24,721,372 shares; 2016, 24,672,932 shares | (480,875 | ) | (479,215 | ) | ||||
Total shareholders’ equity | 1,390,441 | 1,293,982 | ||||||
Total liabilities and shareholders’ equity | $ | 11,044,348 | $ | 10,576,824 |
September 30, 2020 | December 31, 2019 | |||||||||||||
(Unaudited) | ||||||||||||||
ASSETS | ||||||||||||||
Investments | ||||||||||||||
Fixed maturity securities, available for sale, at fair value (amortized cost 2020, $5,672,315; 2019, $5,456,980) | $ | 6,168,558 | $ | 5,791,676 | ||||||||||
Equity securities at fair value | 102,303 | 101,864 | ||||||||||||
Limited partnership interests | 418,187 | 383,717 | ||||||||||||
Short-term and other investments | 453,037 | 361,976 | ||||||||||||
Total investments | 7,142,085 | 6,639,233 | ||||||||||||
Cash | 65,475 | 25,508 | ||||||||||||
Deferred policy acquisition costs | 241,981 | 276,668 | ||||||||||||
Deposit asset on reinsurance | 2,402,539 | 2,346,166 | ||||||||||||
Intangible assets, net | 166,287 | 177,217 | ||||||||||||
Goodwill | 49,079 | 49,079 | ||||||||||||
Other assets | 447,414 | 474,364 | ||||||||||||
Separate Account (variable annuity) assets | 2,488,528 | 2,490,469 | ||||||||||||
Total assets | $ | 13,003,388 | $ | 12,478,704 | ||||||||||
LIABILITIES AND SHAREHOLDERS’ EQUITY | ||||||||||||||
Policy liabilities | ||||||||||||||
Investment contract and policy reserves | $ | 6,402,471 | $ | 6,234,452 | ||||||||||
Unpaid claims and claim expenses | 454,516 | 442,854 | ||||||||||||
Unearned premiums | 272,660 | 279,163 | ||||||||||||
Total policy liabilities | 7,129,647 | 6,956,469 | ||||||||||||
Other policyholder funds | 744,494 | 647,283 | ||||||||||||
Other liabilities | 487,794 | 384,173 | ||||||||||||
Short-term debt | 135,000 | 135,000 | ||||||||||||
Long-term debt | 302,247 | 298,025 | ||||||||||||
Separate Account (variable annuity) liabilities | 2,488,528 | 2,490,469 | ||||||||||||
Total liabilities | 11,287,710 | 10,911,419 | ||||||||||||
Preferred stock, $0.001 par value, authorized 1,000,000 shares; NaN issued | 0 | 0 | ||||||||||||
Common stock, $0.001 par value, authorized 75,000,000 shares; issued, 2020, 66,298,901; 2019, 66,088,808 | 66 | 66 | ||||||||||||
Additional paid-in capital | 486,763 | 480,962 | ||||||||||||
Retained earnings | 1,399,527 | 1,352,539 | ||||||||||||
Accumulated other comprehensive income (loss), net of tax: | ||||||||||||||
Net unrealized investment gains on fixed maturity securities | 328,197 | 230,448 | ||||||||||||
Net funded status of benefit plans | (10,767) | (10,767) | ||||||||||||
Treasury stock, at cost, 2020, 24,902,579 shares; 2019, 24,850,484 shares | (488,108) | (485,963) | ||||||||||||
Total shareholders’ equity | 1,715,678 | 1,567,285 | ||||||||||||
Total liabilities and shareholders’ equity | $ | 13,003,388 | $ | 12,478,704 |
Horace Mann Educators Corporation | 2 | Quarterly Report on Form 10-Q |
Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||||||||||||||||
2020 | 2019 | 2020 | 2019 | |||||||||||||||||||||||
Revenues | ||||||||||||||||||||||||||
Insurance premiums and contract charges earned | $ | 235,353 | $ | 239,681 | $ | 697,049 | $ | 657,562 | ||||||||||||||||||
Net investment income | 93,718 | 93,071 | 256,403 | 279,329 | ||||||||||||||||||||||
Net investment gains (losses) | 2,469 | (2,156) | (12,833) | 151,594 | ||||||||||||||||||||||
Other income | 5,540 | 6,040 | 17,478 | 16,941 | ||||||||||||||||||||||
Total revenues | 337,080 | 336,636 | 958,097 | 1,105,426 | ||||||||||||||||||||||
Benefits, losses and expenses | ||||||||||||||||||||||||||
Benefits, claims and settlement expenses | 151,425 | 154,191 | 433,095 | 446,267 | ||||||||||||||||||||||
Interest credited | 51,030 | 53,576 | 153,249 | 160,092 | ||||||||||||||||||||||
Operating expenses | 57,837 | 63,632 | 173,117 | 175,954 | ||||||||||||||||||||||
DAC unlocking and amortization expense | 24,561 | 26,344 | 74,962 | 82,965 | ||||||||||||||||||||||
Intangible asset amortization expense | 3,558 | 3,781 | 10,930 | 4,863 | ||||||||||||||||||||||
Interest expense | 3,553 | 4,608 | 11,722 | 11,223 | ||||||||||||||||||||||
Other expense - goodwill impairment | 0 | 0 | 0 | 28,025 | ||||||||||||||||||||||
Total benefits, losses and expenses | 291,964 | 306,132 | 857,075 | 909,389 | ||||||||||||||||||||||
Income before income taxes | 45,116 | 30,504 | 101,022 | 196,037 | ||||||||||||||||||||||
Income tax expense | 8,642 | 5,050 | 15,498 | 44,595 | ||||||||||||||||||||||
Net income | $ | 36,474 | $ | 25,454 | $ | 85,524 | $ | 151,442 | ||||||||||||||||||
Net income per share | ||||||||||||||||||||||||||
Basic | $ | 0.87 | $ | 0.61 | $ | 2.04 | $ | 3.63 | ||||||||||||||||||
Diluted | $ | 0.87 | $ | 0.60 | $ | 2.03 | $ | 3.61 | ||||||||||||||||||
Weighted average number of shares and equivalent shares | ||||||||||||||||||||||||||
Basic | 41,916 | 41,785 | 41,865 | 41,715 | ||||||||||||||||||||||
Diluted | 42,058 | 42,030 | 42,013 | 41,911 | ||||||||||||||||||||||
Net investment gains (losses) | ||||||||||||||||||||||||||
Total other-than-temporary impairment losses on securities | $ | (1,057) | $ | (5) | $ | (5,272) | $ | (276) | ||||||||||||||||||
Portion of losses recognized in other comprehensive income (loss) | 0 | 0 | 0 | 0 | ||||||||||||||||||||||
Net other-than-temporary impairment losses on securities recognized in net income | (1,057) | (5) | (5,272) | (276) | ||||||||||||||||||||||
Sales and other, net | 3,736 | 608 | 8,645 | 147,513 | ||||||||||||||||||||||
Change in fair value - equity securities | 2,242 | 1,081 | (5,644) | 8,029 | ||||||||||||||||||||||
Change in fair value and gains (losses) realized on settlements - derivatives | (2,452) | (3,840) | (10,562) | (3,672) | ||||||||||||||||||||||
Total | $ | 2,469 | $ | (2,156) | $ | (12,833) | $ | 151,594 |
Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||||||
2017 | 2016 | 2017 | 2016 | |||||||||||||
Revenues | ||||||||||||||||
Insurance premiums and contract charges earned | $ | 198,935 | $ | 191,050 | $ | 590,375 | $ | 564,860 | ||||||||
Net investment income | 92,320 | 94,847 | 275,025 | 270,685 | ||||||||||||
Net realized investment gains (losses) | (3,486 | ) | 3,985 | (1,656 | ) | 6,911 | ||||||||||
Other income | 2,048 | 1,294 | 4,813 | 3,581 | ||||||||||||
Total revenues | 289,817 | 291,176 | 868,557 | 846,037 | ||||||||||||
Benefits, losses and expenses | ||||||||||||||||
Benefits, claims and settlement expenses | 134,895 | 135,710 | 444,870 | 403,631 | ||||||||||||
Interest credited | 50,078 | 48,658 | 148,200 | 142,924 | ||||||||||||
Policy acquisition expenses amortized | 24,210 | 24,474 | 73,904 | 73,113 | ||||||||||||
Operating expenses | 44,172 | 44,337 | 139,156 | 130,478 | ||||||||||||
Interest expense | 2,978 | 2,975 | 8,879 | 8,858 | ||||||||||||
Total benefits, losses and expenses | 256,333 | 256,154 | 815,009 | 759,004 | ||||||||||||
Income before income taxes | 33,484 | 35,022 | 53,548 | 87,033 | ||||||||||||
Income tax expense | 6,933 | 8,099 | 9,418 | 23,091 | ||||||||||||
Net income | $ | 26,551 | $ | 26,923 | $ | 44,130 | $ | 63,942 | ||||||||
Net income per share | ||||||||||||||||
Basic | $ | 0.64 | $ | 0.66 | $ | 1.07 | $ | 1.55 | ||||||||
Diluted | $ | 0.64 | $ | 0.65 | $ | 1.06 | $ | 1.55 | ||||||||
Weighted average number of common and common equivalent shares (in thousands) | ||||||||||||||||
Basic | 41,433 | 41,092 | 41,337 | 41,155 | ||||||||||||
Diluted | 41,575 | 41,347 | 41,467 | 41,386 | ||||||||||||
Net realized investment gains (losses) | ||||||||||||||||
Total other-than-temporary impairment losses on securities | $ | (6,091 | ) | $ | (160 | ) | $ | (12,452 | ) | $ | (7,686 | ) | ||||
Portion of losses recognized in other comprehensive income | — | — | — | (290 | ) | |||||||||||
Net other-than-temporary impairment losses on securities recognized in earnings | (6,091 | ) | (160 | ) | (12,452 | ) | (7,396 | ) | ||||||||
Realized investment gains, net | 2,605 | 4,145 | 10,796 | 14,307 | ||||||||||||
Total | $ | (3,486 | ) | $ | 3,985 | $ | (1,656 | ) | $ | 6,911 |
Horace Mann Educators Corporation | 3 | Quarterly Report on Form 10-Q |
Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||||||
2017 | 2016 | 2017 | 2016 | |||||||||||||
Comprehensive income | ||||||||||||||||
Net income | $ | 26,551 | $ | 26,923 | $ | 44,130 | $ | 63,942 | ||||||||
Other comprehensive income, net of taxes: | ||||||||||||||||
Change in net unrealized investment gains on fixed maturity and equity securities | 12,208 | 7,638 | 79,980 | 162,124 | ||||||||||||
Change in net funded status of benefit plans | — | — | — | — | ||||||||||||
Other comprehensive income | 12,208 | 7,638 | 79,980 | 162,124 | ||||||||||||
Total | $ | 38,759 | $ | 34,561 | $ | 124,110 | $ | 226,066 |
Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||||||||||||||||
2020 | 2019 | 2020 | 2019 | |||||||||||||||||||||||
Comprehensive income (loss) | ||||||||||||||||||||||||||
Net income | $ | 36,474 | $ | 25,454 | $ | 85,524 | $ | 151,442 | ||||||||||||||||||
Other comprehensive income (loss), net of tax: | ||||||||||||||||||||||||||
Change in net unrealized investment gains (losses) on fixed maturity securities | 49,068 | 63,304 | 97,749 | 169,440 | ||||||||||||||||||||||
Change in net funded status of benefit plans | 0 | 0 | 0 | 0 | ||||||||||||||||||||||
Other comprehensive income (loss) | 49,068 | 63,304 | 97,749 | 169,440 | ||||||||||||||||||||||
Total | $ | 85,542 | $ | 88,758 | $ | 183,273 | $ | 320,882 |
Horace Mann Educators Corporation | 4 | Quarterly Report on Form 10-Q |
Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||||||||||||||||
2020 | 2019 | 2020 | 2019 | |||||||||||||||||||||||
Common stock, $0.001 par value | ||||||||||||||||||||||||||
Beginning balance | $ | 66 | $ | 66 | $ | 66 | $ | 66 | ||||||||||||||||||
Options exercised | — | — | — | — | ||||||||||||||||||||||
Conversion of common stock units | — | — | — | — | ||||||||||||||||||||||
Conversion of restricted stock units | — | — | — | — | ||||||||||||||||||||||
Ending balance | 66 | 66 | 66 | 66 | ||||||||||||||||||||||
Additional paid-in capital | ||||||||||||||||||||||||||
Beginning balance | 483,754 | 476,353 | 480,962 | 475,109 | ||||||||||||||||||||||
Options exercised and conversion of common stock units and restricted stock units | 1,319 | 447 | 1,587 | (1,314) | ||||||||||||||||||||||
Share-based compensation expense | 1,690 | 1,850 | 4,214 | 4,855 | ||||||||||||||||||||||
Ending balance | 486,763 | 478,650 | 486,763 | 478,650 | ||||||||||||||||||||||
Retained earnings | ||||||||||||||||||||||||||
Beginning balance | 1,375,737 | 1,318,329 | 1,352,539 | 1,216,582 | ||||||||||||||||||||||
Net income | 36,474 | 25,454 | 85,524 | 151,442 | ||||||||||||||||||||||
Dividends, 2020, $0.30, $0.90 per share; 2019, $0.2875, $0.8625 per share | (12,684) | (12,120) | (38,027) | (36,361) | ||||||||||||||||||||||
Cumulative effect of change in accounting principle | — | — | (509) | — | ||||||||||||||||||||||
Ending balance | 1,399,527 | 1,331,663 | 1,399,527 | 1,331,663 | ||||||||||||||||||||||
Accumulated other comprehensive income (loss), net of tax: | ||||||||||||||||||||||||||
Beginning balance | 268,362 | 190,892 | 219,681 | 84,756 | ||||||||||||||||||||||
Change in net unrealized investment gains (losses) on fixed maturity securities | 49,068 | 63,304 | 97,749 | 169,440 | ||||||||||||||||||||||
Change in net funded status of benefit plans | — | — | — | — | ||||||||||||||||||||||
Ending balance | 317,430 | 254,196 | 317,430 | 254,196 | ||||||||||||||||||||||
Treasury stock, at cost | ||||||||||||||||||||||||||
Beginning balance | (485,963) | (485,963) | (488,108) | (485,963) | ||||||||||||||||||||||
Acquisition of shares | (2,145) | — | — | — | ||||||||||||||||||||||
Ending balance | (488,108) | (485,963) | (488,108) | (485,963) | ||||||||||||||||||||||
Shareholders' equity at end of period | $ | 1,715,678 | $ | 1,578,612 | $ | 1,715,678 | $ | 1,578,612 |
Nine Months Ended September 30, | ||||||||
2017 | 2016 | |||||||
Common stock, $0.001 par value | ||||||||
Beginning balance | $ | 65 | $ | 65 | ||||
Options exercised, 2017, 156,211 shares; 2016, 114,507 shares | — | — | ||||||
Conversion of common stock units, 2017, 15,981 shares; 2016, 15,629 shares | — | — | ||||||
Conversion of restricted stock units, 2017, 293,002 shares; 2016, 188,207 shares | — | — | ||||||
Ending balance | 65 | 65 | ||||||
Additional paid-in capital | ||||||||
Beginning balance | 453,479 | 442,648 | ||||||
Options exercised and conversion of common stock units and restricted stock units | 2,773 | 2,045 | ||||||
Share-based compensation expense | 5,816 | 6,066 | ||||||
Ending balance | 462,068 | 450,759 | ||||||
Retained earnings | ||||||||
Beginning balance | 1,155,732 | 1,116,277 | ||||||
Net income | 44,130 | 63,942 | ||||||
Cash dividends, 2017, $0.825 per share; 2016, $0.795 per share | (34,580 | ) | (33,241 | ) | ||||
Ending balance | 1,165,282 | 1,146,978 | ||||||
Accumulated other comprehensive income, net of taxes | ||||||||
Beginning balance | 163,921 | 163,373 | ||||||
Change in net unrealized investment gains on fixed maturity and equity securities | 79,980 | 162,124 | ||||||
Change in net funded status of benefit plans | — | — | ||||||
Ending balance | 243,901 | 325,497 | ||||||
Treasury stock, at cost | ||||||||
Beginning balance, 2017, 24,672,932 shares; 2016, 23,971,522 shares | (479,215 | ) | (457,702 | ) | ||||
Acquisition of shares, 2017, 48,440 shares; 2016, 701,410 shares | (1,660 | ) | (21,513 | ) | ||||
Ending balance, 2017, 24,721,372 shares; 2016, 24,672,932 shares | (480,875 | ) | (479,215 | ) | ||||
Shareholders’ equity at end of period | $ | 1,390,441 | $ | 1,444,084 |
Horace Mann Educators Corporation | 5 | Quarterly Report on Form 10-Q |
Nine Months Ended September 30, | ||||||||||||||
2020 | 2019 | |||||||||||||
Cash flows - operating activities | ||||||||||||||
Net income | $ | 85,524 | $ | 151,442 | ||||||||||
Adjustments to reconcile net income to net cash provided by operating activities | ||||||||||||||
Net investment (gains) losses | 12,833 | (151,594) | ||||||||||||
Amortization of premiums and accretion of discounts on fixed maturity securities, net | 4,904 | 1,023 | ||||||||||||
Depreciation and intangible asset amortization | 17,547 | 9,751 | ||||||||||||
Share-based compensation expense | 4,578 | 5,666 | ||||||||||||
Other expense - goodwill impairment | 0 | 28,025 | ||||||||||||
Changes in: | ||||||||||||||
Accrued investment income | (5,476) | 41,994 | ||||||||||||
Insurance liabilities | 97,952 | 40,180 | ||||||||||||
Premium receivables | 4,068 | (9,671) | ||||||||||||
Deferred policy acquisitions | (2,546) | 501 | ||||||||||||
Reinsurance recoverables | 3,265 | 11,837 | ||||||||||||
Income tax liabilities | (3,419) | 34,845 | ||||||||||||
Other operating assets and liabilities | 44,282 | 56,194 | ||||||||||||
Other | 4,312 | (12,957) | ||||||||||||
Net cash provided by operating activities | 267,824 | 207,236 | ||||||||||||
Cash flows - investing activities | ||||||||||||||
Fixed maturity securities | ||||||||||||||
Purchases | (1,093,888) | (845,967) | ||||||||||||
Sales | 352,766 | 651,058 | ||||||||||||
Maturities, paydowns, calls and redemptions | 525,310 | 645,946 | ||||||||||||
Equity securities | ||||||||||||||
Purchases | (23,170) | (10,510) | ||||||||||||
Sales and repayments | 12,368 | 20,989 | ||||||||||||
Limited partnership interests | ||||||||||||||
Purchases | (59,958) | (42,388) | ||||||||||||
Sales | 14,594 | 36,108 | ||||||||||||
Change in short-term and other investments, net | (96,890) | (99,702) | ||||||||||||
Acquisition of businesses, net of cash acquired | 0 | (421,174) | ||||||||||||
Net cash used in investing activities | (368,868) | (65,640) | ||||||||||||
Cash flows - financing activities | ||||||||||||||
Dividends paid to shareholders | (37,196) | (35,477) | ||||||||||||
Principal borrowings on Bank Credit Facility | 0 | 135,000 | ||||||||||||
FHLB borrowings | 4,000 | 0 | ||||||||||||
Acquisition of treasury stock | (2,145) | 0 | ||||||||||||
Proceeds from exercise of stock options | 2,402 | 1,105 | ||||||||||||
Withholding tax payments on RSUs tendered | (1,954) | (3,560) | ||||||||||||
Annuity contracts: variable, fixed and FHLB funding agreements | ||||||||||||||
Deposits | 462,207 | 519,636 | ||||||||||||
Benefits, withdrawals and net transfers to Separate Account (variable annuity) assets | (284,439) | (313,653) | ||||||||||||
Principal repayment on FHLB funding agreements | 0 | (275,000) | ||||||||||||
Life policy accounts | ||||||||||||||
Deposits | 6,775 | 7,143 | ||||||||||||
Withdrawals and surrenders | (2,912) | (2,682) | ||||||||||||
Change in deposit asset on reinsurance | (14,797) | (130,740) | ||||||||||||
Change in book overdrafts | 9,070 | (15,925) | ||||||||||||
Net cash provided by (used in) financing activities | 141,011 | (114,153) | ||||||||||||
Net increase in cash | 39,967 | 27,443 | ||||||||||||
Cash at beginning of period | 25,508 | 11,906 | ||||||||||||
Cash at end of period | $ | 65,475 | $ | 39,349 |
Nine Months Ended September 30, | ||||||||
2017 | 2016 | |||||||
Cash flows - operating activities | ||||||||
Premiums collected | $ | 598,882 | $ | 557,816 | ||||
Policyholder benefits paid | (410,241 | ) | (422,184 | ) | ||||
Policy acquisition and other operating expenses paid | (208,248 | ) | (207,825 | ) | ||||
Federal income taxes paid | (10,061 | ) | (18,156 | ) | ||||
Investment income collected | 271,717 | 259,373 | ||||||
Interest expense paid | (5,821 | ) | (6,072 | ) | ||||
Other | 976 | 1,884 | ||||||
Net cash provided by operating activities | 237,204 | 164,836 | ||||||
Cash flows - investing activities | ||||||||
Fixed maturity securities | ||||||||
Purchases | (1,041,744 | ) | (1,097,880 | ) | ||||
Sales | 315,531 | 351,739 | ||||||
Maturities, paydowns, calls and redemptions | 691,169 | 634,686 | ||||||
Purchase of other invested assets | (98,109 | ) | (42,578 | ) | ||||
Net cash used in equity securities, short-term and other investments | (54,281 | ) | (75,665 | ) | ||||
Net cash used in investing activities | (187,434 | ) | (229,698 | ) | ||||
Cash flows - financing activities | ||||||||
Dividends paid to shareholders | (34,580 | ) | (33,241 | ) | ||||
Acquisition of treasury stock | (1,661 | ) | (21,513 | ) | ||||
Proceeds from exercise of stock options | 3,815 | 2,361 | ||||||
Withholding tax payments on RSUs tendered | (2,745 | ) | (3,321 | ) | ||||
Annuity contracts: variable, fixed and FHLB funding agreements | ||||||||
Deposits | 348,900 | 391,944 | ||||||
Benefits, withdrawals and net transfers to Separate Account (variable annuity) assets | (295,064 | ) | (240,489 | ) | ||||
Transfer of Company 401(k) assets to a third-party provider | (77,898 | ) | — | |||||
Life policy accounts | ||||||||
Deposits | 3,357 | 2,957 | ||||||
Withdrawals and surrenders | (3,340 | ) | (3,151 | ) | ||||
Change in bank overdrafts | (532 | ) | 7,422 | |||||
Net cash (used in) provided by financing activities | (59,748 | ) | 102,969 | |||||
Net (decrease) increase in cash | (9,978 | ) | 38,107 | |||||
Cash at beginning of period | 16,670 | 15,509 | ||||||
Cash at end of period | $ | 6,692 | $ | 53,616 |
Horace Mann Educators Corporation | 6 | Quarterly Report on Form 10-Q |
Horace Mann Educators Corporation | 7 | Quarterly Report on Form 10-Q |
($ in thousands) | September 30, 2017 | December 31, 2016 | ||||||
Investment contract reserves | $ | 4,428,989 | $ | 4,360,456 | ||||
Life policy reserves | 1,111,056 | 1,087,513 | ||||||
Total | $ | 5,540,045 | $ | 5,447,969 |
($ in thousands) | Net Unrealized Investment Gains and Losses on Fixed Maturity and Equity Securities (1)(2) | Benefit Plans (1) | Total (1) | |||||||||
Beginning balance, July 1, 2017 | $ | 243,510 | $ | (11,817 | ) | $ | 231,693 | |||||
Other comprehensive income (loss) before reclassifications | 9,786 | — | 9,786 | |||||||||
Amounts reclassified from accumulated other comprehensive income (loss) | 2,422 | — | 2,422 | |||||||||
Net current period other comprehensive income | 12,208 | — | 12,208 | |||||||||
Ending balance, September 30, 2017 | $ | 255,718 | $ | (11,817 | ) | $ | 243,901 | |||||
Beginning balance, January 1, 2017 | $ | 175,738 | $ | (11,817 | ) | $ | 163,921 | |||||
Other comprehensive income (loss) before reclassifications | 78,419 | — | 78,419 | |||||||||
Amounts reclassified from accumulated other comprehensive income (loss) | 1,561 | — | 1,561 | |||||||||
Net current period other comprehensive income | 79,980 | — | 79,980 | |||||||||
Ending balance, September 30, 2017 | $ | 255,718 | $ | (11,817 | ) | $ | 243,901 |
($ in thousands) | Net Unrealized Investment Gains and Losses on Fixed Maturity and Equity Securities (1)(2) | Benefit Plans (1) | Total (1) | |||||||||
Beginning balance, July 1, 2016 | $ | 329,653 | $ | (11,794 | ) | $ | 317,859 | |||||
Other comprehensive income (loss) before reclassifications | 9,912 | — | 9,912 | |||||||||
Amounts reclassified from accumulated other comprehensive income (loss) | (2,274 | ) | — | (2,274 | ) | |||||||
Net current period other comprehensive income | 7,638 | — | 7,638 | |||||||||
Ending balance, September 30, 2016 | $ | 337,291 | $ | (11,794 | ) | $ | 325,497 | |||||
Beginning balance, January 1, 2016 | $ | 175,167 | $ | (11,794 | ) | $ | 163,373 | |||||
Other comprehensive income (loss) before reclassifications | 167,692 | — | 167,692 | |||||||||
Amounts reclassified from accumulated other comprehensive income (loss) | (5,568 | ) | — | (5,568 | ) | |||||||
Net current period other comprehensive income | 162,124 | — | 162,124 | |||||||||
Ending balance, September 30, 2016 | $ | 337,291 | $ | (11,794 | ) | $ | 325,497 |
Horace Mann Educators Corporation | 8 | Quarterly Report on Form 10-Q |
Horace Mann Educators Corporation | 9 | Quarterly Report on Form 10-Q |
($ in thousands) | Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||||||||||||
2020 | 2019 | 2020 | 2019 | |||||||||||||||||||||||
Fixed maturity securities | $ | 56,420 | $ | 59,319 | $ | 174,727 | $ | 227,196 | ||||||||||||||||||
Equity securities | 1,130 | 1,107 | 3,520 | 3,697 | ||||||||||||||||||||||
Limited partnership interests | 11,046 | 6,859 | 4,862 | 22,759 | ||||||||||||||||||||||
Short-term and other investments | 2,774 | 4,207 | 8,415 | (13,856) | ||||||||||||||||||||||
Investment expenses | (2,151) | (2,179) | (7,262) | (7,420) | ||||||||||||||||||||||
Net investment income - investment portfolio | 69,219 | 69,313 | 184,262 | 232,376 | ||||||||||||||||||||||
Investment income - deposit asset on reinsurance | 24,499 | 23,758 | 72,141 | 46,953 | ||||||||||||||||||||||
Total net investment income | $ | 93,718 | $ | 93,071 | $ | 256,403 | $ | 279,329 |
($ in thousands) | Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||||||||||||
2020 | 2019 | 2020 | 2019 | |||||||||||||||||||||||
Fixed maturity securities | $ | 2,656 | $ | 206 | $ | 3,116 | $ | 141,955 | ||||||||||||||||||
Equity securities | 3,982 | 1,478 | (3,670) | 13,311 | ||||||||||||||||||||||
Short-term investments and other | (4,169) | (3,840) | (12,279) | (3,672) | ||||||||||||||||||||||
Net investment gains (losses) | $ | 2,469 | $ | (2,156) | $ | (12,833) | $ | 151,594 |
($ in thousands) | Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||||||||||||
2020 | 2019 | 2020 | 2019 | |||||||||||||||||||||||
Credit impairment write-downs | $ | 0 | $ | 0 | $ | 0 | $ | 0 | ||||||||||||||||||
Change in intent write-downs | (1,057) | (5) | (5,272) | (276) | ||||||||||||||||||||||
Net other-than-temporary impairment losses on securities recognized in net income | (1,057) | (5) | (5,272) | (276) | ||||||||||||||||||||||
Sales and other, net | 3,736 | 608 | 8,645 | 147,513 | ||||||||||||||||||||||
Change in fair value - equity securities | 2,242 | 1,081 | (5,644) | 8,029 | ||||||||||||||||||||||
Change in fair value and gains (losses) realized on settlements - derivatives | (2,452) | (3,840) | (10,562) | (3,672) | ||||||||||||||||||||||
Net investment gains (losses) | $ | 2,469 | $ | (2,156) | $ | (12,833) | $ | 151,594 |
Horace Mann Educators Corporation | 10 | Quarterly Report on Form 10-Q |
($ in thousands) | Amortized Cost | Unrealized Gains | Unrealized Losses | Fair Value | ||||||||||||||||||||||
September 30, 2020 | ||||||||||||||||||||||||||
Fixed maturity securities | ||||||||||||||||||||||||||
U.S. Government and federally sponsored agency obligations: (1) | ||||||||||||||||||||||||||
Mortgage-backed securities | $ | 617,856 | $ | 85,219 | $ | 213 | $ | 702,862 | ||||||||||||||||||
Other, including U.S. Treasury securities | 341,771 | 42,683 | 317 | 384,137 | ||||||||||||||||||||||
Municipal bonds | 1,621,308 | 196,317 | 1,124 | 1,816,501 | ||||||||||||||||||||||
Foreign government bonds | 40,143 | 4,644 | 0 | 44,787 | ||||||||||||||||||||||
Corporate bonds | 1,802,423 | 189,986 | 8,926 | 1,983,483 | ||||||||||||||||||||||
Other asset-backed securities | 1,248,814 | 22,353 | 34,379 | 1,236,788 | ||||||||||||||||||||||
Totals | $ | 5,672,315 | $ | 541,202 | $ | 44,959 | $ | 6,168,558 | ||||||||||||||||||
December 31, 2019 | ||||||||||||||||||||||||||
Fixed maturity securities | ||||||||||||||||||||||||||
U.S. Government and federally sponsored agency obligations: (1) | ||||||||||||||||||||||||||
Mortgage-backed securities | $ | 684,543 | $ | 41,263 | $ | 1,487 | $ | 724,319 | ||||||||||||||||||
Other, including U.S. Treasury securities | 436,665 | 22,824 | 621 | 458,868 | ||||||||||||||||||||||
Municipal bonds | 1,545,787 | 141,996 | 1,580 | 1,686,203 | ||||||||||||||||||||||
Foreign government bonds | 42,801 | 2,569 | 0 | 45,370 | ||||||||||||||||||||||
Corporate bonds | 1,464,444 | 118,775 | 1,795 | 1,581,424 | ||||||||||||||||||||||
Other asset-backed securities | 1,282,740 | 20,883 | 8,131 | 1,295,492 | ||||||||||||||||||||||
Totals | $ | 5,456,980 | $ | 348,310 | $ | 13,614 | $ | 5,791,676 |
($ in thousands) | Amortized Cost or Cost | Unrealized Investment Gains | Unrealized Investment Losses | Fair Value | OTTI in AOCI (1) | |||||||||||||||
September 30, 2017 | ||||||||||||||||||||
Fixed maturity securities | ||||||||||||||||||||
U.S. Government and federally sponsored agency obligations (2): | ||||||||||||||||||||
Mortgage-backed securities | $ | 613,761 | $ | 34,712 | $ | 3,071 | $ | 645,402 | $ | — | ||||||||||
Other, including U.S. Treasury securities | 653,237 | 24,705 | 6,922 | 671,020 | — | |||||||||||||||
Municipal bonds | 1,669,273 | 177,359 | 4,428 | 1,842,204 | — | |||||||||||||||
Foreign government bonds | 93,761 | 6,416 | — | 100,177 | — | |||||||||||||||
Corporate bonds | 2,635,313 | 190,548 | 4,158 | 2,821,703 | — | |||||||||||||||
Other mortgage-backed securities | 1,529,052 | 26,879 | 5,803 | 1,550,128 | 1,335 | |||||||||||||||
Totals | $ | 7,194,397 | $ | 460,619 | $ | 24,382 | $ | 7,630,634 | $ | 1,335 | ||||||||||
Equity securities (3) | $ | 140,200 | $ | 20,483 | $ | 1,408 | $ | 159,275 | $ | — | ||||||||||
December 31, 2016 | ||||||||||||||||||||
Fixed maturity securities | ||||||||||||||||||||
U.S. Government and federally sponsored agency obligations (2): | ||||||||||||||||||||
Mortgage-backed securities | $ | 587,355 | $ | 34,256 | $ | 6,720 | $ | 614,891 | $ | — | ||||||||||
Other, including U.S. Treasury securities | 458,745 | 18,518 | 10,120 | 467,143 | — | |||||||||||||||
Municipal bonds | 1,648,252 | 143,733 | 22,588 | 1,769,397 | — | |||||||||||||||
Foreign government bonds | 93,864 | 5,102 | 297 | 98,669 | — | |||||||||||||||
Corporate bonds | 2,672,818 | 152,229 | 14,826 | 2,810,221 | — | |||||||||||||||
Other mortgage-backed securities | 1,691,093 | 21,153 | 15,859 | 1,696,387 | 1,618 | |||||||||||||||
Totals | $ | 7,152,127 | $ | 374,991 | $ | 70,410 | $ | 7,456,708 | $ | 1,618 | ||||||||||
Equity securities (3) | $ | 134,013 | $ | 13,210 | $ | 5,574 | $ | 141,649 | $ | — |
Quarterly Report on |
($ in thousands) | 12 Months or Less | More than 12 Months | Total | |||||||||||||||||||||||||||||||||||
Fair Value | Gross Unrealized Losses | Fair Value | Gross Unrealized Losses | Fair Value | Gross Unrealized Losses | |||||||||||||||||||||||||||||||||
September 30, 2020 | ||||||||||||||||||||||||||||||||||||||
Fixed maturity securities | ||||||||||||||||||||||||||||||||||||||
U.S. Government and federally sponsored agency obligations: | ||||||||||||||||||||||||||||||||||||||
Mortgage-backed securities | $ | 8,519 | $ | 134 | $ | 1,246 | $ | 79 | $ | 9,765 | $ | 213 | ||||||||||||||||||||||||||
Other | 31,797 | 317 | 0 | 0 | 31,797 | 317 | ||||||||||||||||||||||||||||||||
Municipal bonds | 47,067 | 1,124 | 0 | 0 | 47,067 | 1,124 | ||||||||||||||||||||||||||||||||
Foreign government bonds | 0 | 0 | 0 | 0 | 0 | 0 | ||||||||||||||||||||||||||||||||
Corporate bonds | 203,521 | 8,444 | 9,873 | 482 | 213,394 | 8,926 | ||||||||||||||||||||||||||||||||
Other asset-backed securities | 397,424 | 24,376 | 413,159 | 10,003 | 810,583 | 34,379 | ||||||||||||||||||||||||||||||||
Total | $ | 688,328 | $ | 34,395 | $ | 424,278 | $ | 10,564 | $ | 1,112,606 | $ | 44,959 | ||||||||||||||||||||||||||
Number of positions with a gross unrealized loss | 475 | 124 | 599 | |||||||||||||||||||||||||||||||||||
Fair value as a percentage of total fixed maturity securities at fair value | 11.2 | % | 6.9 | % | 18.1 | % | ||||||||||||||||||||||||||||||||
December 31, 2019 | ||||||||||||||||||||||||||||||||||||||
Fixed maturity securities | ||||||||||||||||||||||||||||||||||||||
U.S. Government and federally sponsored agency obligations: | ||||||||||||||||||||||||||||||||||||||
Mortgage-backed securities | $ | 72,422 | $ | 1,282 | $ | 2,620 | $ | 205 | $ | 75,042 | $ | 1,487 | ||||||||||||||||||||||||||
Other | 38,341 | 619 | 1,527 | 2 | 39,868 | 621 | ||||||||||||||||||||||||||||||||
Municipal bonds | 91,195 | 977 | 9,160 | 603 | 100,355 | 1,580 | ||||||||||||||||||||||||||||||||
Foreign government bonds | 0 | 0 | 0 | 0 | 0 | 0 | ||||||||||||||||||||||||||||||||
Corporate bonds | 58,198 | 886 | 16,622 | 909 | 74,820 | 1,795 | ||||||||||||||||||||||||||||||||
Other asset-backed securities | 218,710 | 1,970 | 442,791 | 6,161 | 661,501 | 8,131 | ||||||||||||||||||||||||||||||||
Total | $ | 478,866 | $ | 5,734 | $ | 472,720 | $ | 7,880 | $ | 951,586 | $ | 13,614 | ||||||||||||||||||||||||||
Number of positions with a gross unrealized loss | 330 | 137 | 467 | |||||||||||||||||||||||||||||||||||
Fair value as a percentage of total fixed maturity securities at fair value | 8.3 | % | 8.2 | % | 16.5 | % |
($ in thousands) | 12 Months or Less | More than 12 Months | Total | |||||||||||||||||||||
Fair Value | Gross Unrealized Losses | Fair Value | Gross Unrealized Losses | Fair Value | Gross Unrealized Losses | |||||||||||||||||||
September 30, 2017 | ||||||||||||||||||||||||
Fixed maturity securities | ||||||||||||||||||||||||
U.S. Government and federally sponsored agency obligations: | ||||||||||||||||||||||||
Mortgage-backed securities | $ | 111,456 | $ | 2,213 | $ | 12,879 | $ | 858 | $ | 124,335 | $ | 3,071 | ||||||||||||
Other | 275,332 | 5,901 | 16,979 | 1,021 | 292,311 | 6,922 | ||||||||||||||||||
Municipal bonds | 118,881 | 2,731 | 32,710 | 1,697 | 151,591 | 4,428 | ||||||||||||||||||
Foreign government bonds | — | — | — | — | — | — | ||||||||||||||||||
Corporate bonds | 138,207 | 2,287 | 49,931 | 1,871 | 188,138 | 4,158 | ||||||||||||||||||
Other mortgage-backed securities | 349,600 | 3,985 | 126,297 | 1,818 | 475,897 | 5,803 | ||||||||||||||||||
Total fixed maturity securities | 993,476 | 17,117 | 238,796 | 7,265 | 1,232,272 | 24,382 | ||||||||||||||||||
Equity securities (1) | 10,547 | 692 | 2,192 | 716 | 12,739 | 1,408 | ||||||||||||||||||
Combined totals | $ | 1,004,023 | $ | 17,809 | $ | 240,988 | $ | 7,981 | $ | 1,245,011 | $ | 25,790 | ||||||||||||
Number of positions with a gross unrealized loss | 393 | 77 | 470 | |||||||||||||||||||||
Fair value as a percentage of total fixed maturity and equity securities fair value | 12.9 | % | 3.1 | % | 16.0 | % | ||||||||||||||||||
December 31, 2016 | ||||||||||||||||||||||||
Fixed maturity securities | ||||||||||||||||||||||||
U.S. Government and federally sponsored agency obligations: | ||||||||||||||||||||||||
Mortgage-backed securities | $ | 186,439 | $ | 6,176 | $ | 3,235 | $ | 544 | $ | 189,674 | $ | 6,720 | ||||||||||||
Other | 219,372 | 10,120 | — | — | 219,372 | 10,120 | ||||||||||||||||||
Municipal bonds | 408,163 | 19,006 | 9,928 | 3,582 | 418,091 | 22,588 | ||||||||||||||||||
Foreign government bonds | 24,182 | 297 | — | — | 24,182 | 297 | ||||||||||||||||||
Corporate bonds | 459,402 | 11,056 | 57,261 | 3,770 | 516,663 | 14,826 | ||||||||||||||||||
Other mortgage-backed securities | 640,691 | 10,470 | 229,106 | 5,389 | 869,797 | 15,859 | ||||||||||||||||||
Total fixed maturity securities | 1,938,249 | 57,125 | 299,530 | 13,285 | 2,237,779 | 70,410 | ||||||||||||||||||
Equity securities (1) | 56,676 | 4,567 | 7,956 | 1,007 | 64,632 | 5,574 | ||||||||||||||||||
Combined totals | $ | 1,994,925 | $ | 61,692 | $ | 307,486 | $ | 14,292 | $ | 2,302,411 | $ | 75,984 | ||||||||||||
Number of positions with a gross unrealized loss | 629 | 102 | 731 | |||||||||||||||||||||
Fair value as a percentage of total fixed maturity and equity securities fair value | 26.3 | % | 4.0 | % | 30.3 | % |
Horace Mann Educators Corporation | 12 | Quarterly Report on Form 10-Q |
($ in thousands) | Nine Months Ended September 30, | |||||||||||||
2020 | 2019 | |||||||||||||
Cumulative credit loss (1) | ||||||||||||||
Beginning of period | $ | 1,529 | $ | 1,529 | ||||||||||
New credit losses | 184 | 0 | ||||||||||||
Increases to previously recognized credit losses | 0 | 0 | ||||||||||||
Losses related to securities sold or paid down during the period | (103) | 0 | ||||||||||||
End of period | $ | 1,610 | $ | 1,529 |
($ in thousands) | Nine Months Ended September 30, | |||||||
2017 | 2016 | |||||||
Cumulative credit loss (1) | ||||||||
Beginning of period | $ | 13,703 | $ | 7,844 | ||||
New credit losses | — | 300 | ||||||
Increases to previously recognized credit losses | 1,994 | 2,480 | ||||||
Gains related to securities sold or paid down during the period | (2 | ) | — | |||||
End of period | $ | 15,695 | $ | 10,624 |
($ in thousands) | Percent of Total Fair Value | September 30, 2020 | ||||||||||||||||||||||||
September 30, 2020 | December 31, 2019 | Fair Value | Amortized Cost | |||||||||||||||||||||||
Estimated expected maturity: | ||||||||||||||||||||||||||
Due in 1 year or less | 4.2 | % | 3.6 | % | $ | 261,323 | $ | 258,244 | ||||||||||||||||||
Due after 1 year through 5 years | 28.1 | % | 27.4 | % | 1,734,450 | 1,676,356 | ||||||||||||||||||||
Due after 5 years through 10 years | 28.9 | % | 29.6 | % | 1,782,261 | 1,628,583 | ||||||||||||||||||||
Due after 10 years through 20 years | 24.3 | % | 26.1 | % | 1,496,331 | 1,309,759 | ||||||||||||||||||||
Due after 20 years | 14.5 | % | 13.3 | % | 894,193 | 799,373 | ||||||||||||||||||||
Total | 100.0 | % | 100.0 | % | $ | 6,168,558 | $ | 5,672,315 | ||||||||||||||||||
Average option-adjusted duration, in years | 6.3 | 6.0 |
($ in thousands) | Percent of Total Fair Value | September 30, 2017 | ||||||||||||
September 30, 2017 | December 31, 2016 | Fair Value | Amortized Cost | |||||||||||
Estimated expected maturity: | ||||||||||||||
Due in 1 year or less | 3.4 | % | 3.9 | % | $ | 256,527 | $ | 250,803 | ||||||
Due after 1 year through 5 years | 27.5 | 28.7 | 2,097,243 | 1,998,498 | ||||||||||
Due after 5 years through 10 years | 33.3 | 35.2 | 2,540,303 | 2,431,895 | ||||||||||
Due after 10 years through 20 years | 23.3 | 19.5 | 1,780,760 | 1,654,259 | ||||||||||
Due after 20 years | 12.5 | 12.7 | 955,801 | 858,942 | ||||||||||
Total | 100.0 | % | 100.0 | % | $ | 7,630,634 | $ | 7,194,397 | ||||||
Average option-adjusted duration, in years | 6.0 | 5.9 |
Horace Mann Educators Corporation | 13 | Quarterly Report on Form 10-Q |
($ in thousands) | Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||||||||||||
2020 | 2019 | 2020 | 2019 (1) | |||||||||||||||||||||||
Fixed maturity securities | ||||||||||||||||||||||||||
Proceeds received | $ | 58,604 | $ | 149,319 | $ | 352,766 | $ | 651,058 | ||||||||||||||||||
Gross gains realized | 3,744 | 1,258 | 14,029 | 149,574 | ||||||||||||||||||||||
Gross losses realized | (31) | (1,047) | (5,924) | (7,128) | ||||||||||||||||||||||
Equity securities | ||||||||||||||||||||||||||
Proceeds received | $ | 309 | $ | 1,367 | $ | 12,368 | $ | 18,489 | ||||||||||||||||||
Gross gains realized | 79 | 428 | 2,119 | 5,562 | ||||||||||||||||||||||
Gross losses realized | (38) | (32) | (1,843) | (542) |
($ in thousands) | Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||
2017 | 2016 | 2017 | 2016 | |||||||||||||
Fixed maturity securities | ||||||||||||||||
Proceeds received | $ | 85,841 | $ | 94,706 | $ | 315,531 | $ | 351,739 | ||||||||
Gross gains realized | 2,293 | 2,966 | 8,862 | 13,824 | ||||||||||||
Gross losses realized | (181 | ) | (102 | ) | (1,558 | ) | (1,542 | ) | ||||||||
Equity securities | ||||||||||||||||
Proceeds received | $ | 3,514 | $ | 4,479 | $ | 20,510 | $ | 17,101 | ||||||||
Gross gains realized | 477 | 790 | 3,227 | 1,960 | ||||||||||||
Gross losses realized | (293 | ) | (21 | ) | (721 | ) | (862 | ) |
($ in thousands) | Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||||||||||||
2020 | 2019 | 2020 | 2019 | |||||||||||||||||||||||
Net unrealized investment gains (losses) on fixed maturity securities, net of tax | ||||||||||||||||||||||||||
Beginning of period | $ | 329,887 | $ | 231,087 | $ | 264,410 | $ | 111,712 | ||||||||||||||||||
Change in net unrealized investment gains (losses) on fixed maturity securities | 56,901 | 75,283 | 128,060 | 315,988 | ||||||||||||||||||||||
Reclassification of net investment (gains) losses on securities to net income | 5,244 | (1,330) | (438) | (122,660) | ||||||||||||||||||||||
End of period | $ | 392,032 | $ | 305,040 | $ | 392,032 | $ | 305,040 |
($ in thousands) | Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||
2017 | 2016 | 2017 | 2016 | |||||||||||||
Net unrealized investment gains and losses on fixed maturity securities, net of tax | ||||||||||||||||
Beginning of period | $ | 270,834 | $ | 371,456 | $ | 197,978 | $ | 198,714 | ||||||||
Change in net unrealized investment gains and losses | 10,133 | 20,827 | 83,547 | 188,912 | ||||||||||||
Reclassification of net realized investment (gains) losses to net income | 2,587 | (11,072 | ) | 2,029 | (6,415 | ) | ||||||||||
End of period | $ | 283,554 | $ | 381,211 | $ | 283,554 | $ | 381,211 | ||||||||
Net unrealized investment gains and losses on equity securities, net of tax | ||||||||||||||||
Beginning of period | $ | 10,631 | $ | 8,183 | $ | 4,963 | $ | 2,649 | ||||||||
Change in net unrealized investment gains and losses | 1,933 | (2,052 | ) | 7,905 | 4,846 | |||||||||||
Reclassification of net realized investment (gains) losses to net income | (165 | ) | 2,211 | (469 | ) | 847 | ||||||||||
End of period | $ | 12,399 | $ | 8,342 | $ | 12,399 | $ | 8,342 |
Horace Mann Educators Corporation | 14 | Quarterly Report on Form 10-Q |
($ in thousands) | Gross Amounts Offset in the | Net Amounts of Assets/ Liabilities Presented in the | Gross Amounts Not Offset in the Consolidated Balance Sheets | |||||||||||||||||||||
Gross Amounts | Consolidated Balance Sheets | Consolidated Balance Sheets | Financial Instruments | Cash Collateral Received | Net Amount | |||||||||||||||||||
September 30, 2017 | ||||||||||||||||||||||||
Asset derivatives: | ||||||||||||||||||||||||
Free-standing derivatives | $ | 10,431 | $ | — | $ | 10,431 | $ | — | $ | 10,954 | $ | (523 | ) | |||||||||||
December 31, 2016 | ||||||||||||||||||||||||
Asset derivatives: | ||||||||||||||||||||||||
Free-standing derivatives | $ | 8,694 | $ | — | $ | 8,694 | $ | — | $ | 8,824 | $ | (130 | ) |
($ in thousands) | Gross Amounts Offset in the Consolidated Balance Sheets | Net Amounts of Assets/ Liabilities Presented in the Consolidated Balance Sheets | Gross Amounts Not Offset in the Consolidated Balance Sheets | |||||||||||||||||||||||||||||||||||
Gross Amounts | Financial Instruments | Cash Collateral Received | Net Amount | |||||||||||||||||||||||||||||||||||
September 30, 2020 | ||||||||||||||||||||||||||||||||||||||
Asset derivatives: | ||||||||||||||||||||||||||||||||||||||
Free-standing derivatives | $ | 10,793 | $ | 0 | $ | 10,793 | $ | 7,952 | $ | 1,960 | $ | 881 | ||||||||||||||||||||||||||
December 31, 2019 | ||||||||||||||||||||||||||||||||||||||
Asset derivatives: | ||||||||||||||||||||||||||||||||||||||
Free-standing derivatives | 13,239 | 0 | 13,239 | 7,687 | 6,640 | (1,088) |
Horace Mann Educators Corporation | 15 | Quarterly Report on Form 10-Q |
($ in thousands) | Fair Value Measurements at | |||||||||||||||||||||||||||||||
Carrying | Fair | Reporting Date Using | ||||||||||||||||||||||||||||||
Amount | Value | Level 1 | Level 2 | Level 3 | ||||||||||||||||||||||||||||
September 30, 2020 | ||||||||||||||||||||||||||||||||
Financial Assets | ||||||||||||||||||||||||||||||||
Investments | ||||||||||||||||||||||||||||||||
Fixed maturity securities | ||||||||||||||||||||||||||||||||
U.S. Government and federally sponsored agency obligations: | ||||||||||||||||||||||||||||||||
Mortgage-backed securities | $ | 702,862 | $ | 702,862 | $ | 0 | $ | 690,663 | $ | 12,199 | ||||||||||||||||||||||
Other, including U.S. Treasury securities | 384,137 | 384,137 | 18,446 | 365,691 | 0 | |||||||||||||||||||||||||||
Municipal bonds | 1,816,501 | 1,816,501 | 0 | 1,750,830 | 65,671 | |||||||||||||||||||||||||||
Foreign government bonds | 44,787 | 44,787 | 0 | 44,787 | 0 | |||||||||||||||||||||||||||
Corporate bonds | 1,983,483 | 1,983,483 | 14,076 | 1,848,222 | 121,185 | |||||||||||||||||||||||||||
Other asset-backed securities | 1,236,788 | 1,236,788 | 0 | 1,108,189 | 128,599 | |||||||||||||||||||||||||||
Total fixed maturity securities | 6,168,558 | 6,168,558 | 32,522 | 5,808,382 | 327,654 | |||||||||||||||||||||||||||
Equity securities | 102,303 | 102,303 | 36,274 | 65,941 | 88 | |||||||||||||||||||||||||||
Short-term investments | 254,309 | 254,309 | 250,206 | 4,103 | 0 | |||||||||||||||||||||||||||
Other investments | 30,245 | 30,245 | 0 | 30,245 | 0 | |||||||||||||||||||||||||||
Totals | $ | 6,555,415 | $ | 6,555,415 | $ | 319,002 | $ | 5,908,671 | $ | 327,742 | ||||||||||||||||||||||
Separate Account (variable annuity) assets (1) | $ | 2,488,528 | $ | 2,488,528 | $ | 2,488,528 | $ | 0 | $ | 0 | ||||||||||||||||||||||
Financial Liabilities | ||||||||||||||||||||||||||||||||
Investment contract and policy reserves, embedded derivatives | $ | 1,703 | $ | 1,703 | $ | 0 | $ | 1,703 | $ | 0 | ||||||||||||||||||||||
Other policyholder funds, embedded derivatives | $ | 98,070 | $ | 98,070 | $ | 0 | $ | 0 | $ | 98,070 | ||||||||||||||||||||||
December 31, 2019 | ||||||||||||||||||||||||||||||||
Financial Assets | ||||||||||||||||||||||||||||||||
Investments | ||||||||||||||||||||||||||||||||
Fixed maturity securities | ||||||||||||||||||||||||||||||||
U.S. Government and federally sponsored agency obligations: | ||||||||||||||||||||||||||||||||
Mortgage-backed securities | $ | 724,319 | $ | 724,319 | $ | 0 | $ | 711,004 | $ | 13,315 | ||||||||||||||||||||||
Other, including U.S. Treasury securities | 458,868 | 458,868 | 17,699 | 441,169 | 0 | |||||||||||||||||||||||||||
Municipal bonds | 1,686,203 | 1,686,203 | 0 | 1,641,912 | 44,291 | |||||||||||||||||||||||||||
Foreign government bonds | 45,370 | 45,370 | 0 | 45,370 | 0 | |||||||||||||||||||||||||||
Corporate bonds | 1,581,424 | 1,581,424 | 14,470 | 1,463,002 | 103,952 | |||||||||||||||||||||||||||
Other asset-backed securities | 1,295,492 | 1,295,492 | 0 | 1,161,979 | 133,513 | |||||||||||||||||||||||||||
Total fixed maturity securities | 5,791,676 | 5,791,676 | 32,169 | 5,464,436 | 295,071 | |||||||||||||||||||||||||||
Equity securities | 101,864 | 101,864 | 49,834 | 51,923 | 107 | |||||||||||||||||||||||||||
Short-term investments | 172,667 | 172,667 | 172,667 | 0 | 0 | |||||||||||||||||||||||||||
Other investments | 25,997 | 25,997 | 0 | 25,997 | 0 | |||||||||||||||||||||||||||
Totals | $ | 6,092,204 | $ | 6,092,204 | $ | 254,670 | $ | 5,542,356 | $ | 295,178 | ||||||||||||||||||||||
Separate Account (variable annuity) assets (1) | $ | 2,490,469 | $ | 2,490,469 | $ | 2,490,469 | $ | 0 | $ | 0 | ||||||||||||||||||||||
Financial Liabilities | ||||||||||||||||||||||||||||||||
Investment contract and policy reserves, embedded derivatives | $ | 1,314 | $ | 1,314 | $ | 0 | $ | 1,314 | $ | 0 | ||||||||||||||||||||||
Other policyholder funds, embedded derivatives | $ | 93,733 | $ | 93,733 | $ | 0 | $ | 0 | $ | 93,733 |
($ in thousands) | Fair Value Measurements at | |||||||||||||||||||
Carrying | Fair | Reporting Date Using | ||||||||||||||||||
Amount | Value | Level 1 | Level 2 | Level 3 | ||||||||||||||||
September 30, 2017 | ||||||||||||||||||||
Financial Assets | ||||||||||||||||||||
Investments | ||||||||||||||||||||
Fixed maturity securities | ||||||||||||||||||||
U.S. Government and federally sponsored agency obligations: | ||||||||||||||||||||
Mortgage-backed securities | $ | 645,402 | $ | 645,402 | $ | — | $ | 642,110 | $ | 3,292 | ||||||||||
Other, including U.S. Treasury securities | 671,020 | 671,020 | 13,484 | 657,536 | — | |||||||||||||||
Municipal bonds | 1,842,204 | 1,842,204 | — | 1,792,992 | 49,212 | |||||||||||||||
Foreign government bonds | 100,177 | 100,177 | — | 100,177 | — | |||||||||||||||
Corporate bonds | 2,821,703 | 2,821,703 | 14,798 | 2,712,660 | 94,245 | |||||||||||||||
Other mortgage-backed securities | 1,550,128 | 1,550,128 | — | 1,431,802 | 118,326 | |||||||||||||||
Total fixed maturity securities | 7,630,634 | 7,630,634 | 28,282 | 7,337,277 | 265,075 | |||||||||||||||
Equity securities | 159,275 | 159,275 | 103,552 | 55,717 | 6 | |||||||||||||||
Short-term investments | 111,488 | 111,488 | 111,488 | — | — | |||||||||||||||
Other investments | 21,944 | 21,944 | — | 21,944 | — | |||||||||||||||
Totals | $ | 7,923,341 | $ | 7,923,341 | $ | 243,322 | $ | 7,414,938 | $ | 265,081 | ||||||||||
Financial Liabilities | ||||||||||||||||||||
Investment contract and life policy reserves, embedded derivatives | $ | 390 | $ | 390 | $ | — | $ | 390 | $ | — | ||||||||||
Other policyholder funds, embedded derivatives | 72,986 | 72,986 | — | — | 72,986 | |||||||||||||||
December 31, 2016 | ||||||||||||||||||||
Financial Assets | ||||||||||||||||||||
Investments | ||||||||||||||||||||
Fixed maturity securities | ||||||||||||||||||||
U.S. Government and federally sponsored agency obligations: | ||||||||||||||||||||
Mortgage-backed securities | $ | 614,891 | $ | 614,891 | $ | — | $ | 611,476 | $ | 3,415 | ||||||||||
Other, including U.S. Treasury securities | 467,143 | 467,143 | 13,631 | 453,512 | — | |||||||||||||||
Municipal bonds | 1,769,397 | 1,769,397 | — | 1,722,900 | 46,497 | |||||||||||||||
Foreign government bonds | 98,669 | 98,669 | — | 98,669 | — | |||||||||||||||
Corporate bonds | 2,810,221 | 2,810,221 | 13,532 | 2,736,498 | 60,191 | |||||||||||||||
Other mortgage-backed securities | 1,696,387 | 1,696,387 | — | 1,595,143 | 101,244 | |||||||||||||||
Total fixed maturity securities | 7,456,708 | 7,456,708 | 27,163 | 7,218,198 | 211,347 | |||||||||||||||
Equity securities | 141,649 | 141,649 | 98,632 | 43,011 | 6 | |||||||||||||||
Short-term investments | 44,918 | 44,918 | 44,167 | — | 751 | |||||||||||||||
Other investments | 20,194 | 20,194 | — | 20,194 | — | |||||||||||||||
Totals | $ | 7,663,469 | $ | 7,663,469 | $ | 169,962 | $ | 7,281,403 | $ | 212,104 | ||||||||||
Financial Liabilities | ||||||||||||||||||||
Investment contract and life policy reserves, embedded derivatives | $ | 158 | $ | 158 | $ | — | $ | 158 | $ | — | ||||||||||
Other policyholder funds, embedded derivatives | 59,393 | 59,393 | — | — | 59,393 |
Horace Mann Educators Corporation | 16 | Quarterly Report on Form 10-Q |
($ in thousands) | Financial Assets | Financial Liabilities (1) | ||||||||||||||||||||||||||||||||||||||||||
Municipal Bonds | Corporate Bonds | Other Mortgage- Backed Securities(2) | Total Fixed Maturity Securities | Equity Securities | Total | |||||||||||||||||||||||||||||||||||||||
Beginning balance, July 1, 2020 | $ | 73,171 | $ | 126,292 | $ | 200,146 | $ | 399,609 | $ | 115 | $ | 399,724 | $ | 93,619 | ||||||||||||||||||||||||||||||
Transfers into Level 3 (3) | 6,209 | 6,798 | 8,663 | 21,670 | 0 | 21,670 | 0 | |||||||||||||||||||||||||||||||||||||
Transfers out of Level 3 (3) | (16,708) | (12,511) | (70,950) | (100,169) | 0 | (100,169) | 0 | |||||||||||||||||||||||||||||||||||||
Total gains or losses | ||||||||||||||||||||||||||||||||||||||||||||
Net investment gains (losses) included in net income related to financial assets | 0 | 0 | (238) | (238) | (27) | (265) | — | |||||||||||||||||||||||||||||||||||||
Net investment (gains) losses included in net income related to financial liabilities | — | — | — | — | — | — | 4,406 | |||||||||||||||||||||||||||||||||||||
Net unrealized investment gains (losses) included in OCI | 3,150 | 551 | 6,321 | 10,022 | 0 | 10,022 | 0 | |||||||||||||||||||||||||||||||||||||
Purchases | 0 | 0 | 0 | 0 | 0 | 0 | 0 | |||||||||||||||||||||||||||||||||||||
Issuances | 0 | 0 | 0 | 0 | 0 | 0 | 1,951 | |||||||||||||||||||||||||||||||||||||
Sales | 0 | 0 | 0 | 0 | 0 | 0 | 0 | |||||||||||||||||||||||||||||||||||||
Settlements | 0 | 0 | 0 | 0 | 0 | 0 | 0 | |||||||||||||||||||||||||||||||||||||
Paydowns, maturities and distributions | (151) | 55 | (3,144) | (3,240) | 0 | (3,240) | (1,906) | |||||||||||||||||||||||||||||||||||||
Ending balance, September 30, 2020 | $ | 65,671 | $ | 121,185 | $ | 140,798 | $ | 327,654 | $ | 88 | $ | 327,742 | $ | 98,070 | ||||||||||||||||||||||||||||||
Beginning balance, January 1, 2020 | $ | 44,291 | $ | 103,952 | $ | 146,828 | $ | 295,071 | $ | 107 | $ | 295,178 | $ | 93,733 | ||||||||||||||||||||||||||||||
Transfers into Level 3 (3) | 80,686 | 39,601 | 95,377 | 215,664 | 0 | 215,664 | 0 | |||||||||||||||||||||||||||||||||||||
Transfers out of Level 3 (3) | (62,625) | (26,699) | (77,335) | (166,659) | 0 | (166,659) | 0 | |||||||||||||||||||||||||||||||||||||
Total gains or losses | ||||||||||||||||||||||||||||||||||||||||||||
Net investment gains (losses) included in net income related to financial assets | 0 | 0 | (238) | (238) | (19) | (257) | — | |||||||||||||||||||||||||||||||||||||
Net investment (gains) losses included in net income related to financial liabilities | — | — | — | — | — | — | 5,330 | |||||||||||||||||||||||||||||||||||||
Net unrealized investment gains (losses) included in OCI | 3,962 | 378 | (14,780) | (10,440) | 0 | (10,440) | 0 | |||||||||||||||||||||||||||||||||||||
Purchases | 0 | 6,875 | 1,890 | 8,765 | 0 | 8,765 | 0 | |||||||||||||||||||||||||||||||||||||
Issuances | 0 | 0 | 0 | 0 | 0 | 0 | 5,818 | |||||||||||||||||||||||||||||||||||||
Sales | 0 | 0 | 0 | 0 | 0 | 0 | 0 | |||||||||||||||||||||||||||||||||||||
Settlements | 0 | 0 | 0 | 0 | 0 | 0 | 0 | |||||||||||||||||||||||||||||||||||||
Paydowns, maturities and distributions | (643) | (2,922) | (10,944) | (14,509) | 0 | (14,509) | (6,811) | |||||||||||||||||||||||||||||||||||||
Ending balance, September 30, 2020 | $ | 65,671 | $ | 121,185 | $ | 140,798 | $ | 327,654 | $ | 88 | $ | 327,742 | $ | 98,070 |
($ in thousands) | Financial Assets | Financial Liabilities(1) | ||||||||||||||||||||||||||||||
Municipal Bonds | Corporate Bonds | Mortgage- Backed Securities (2) | Total Fixed Maturity Securities | Equity Securities | Short-term Investments | Total | ||||||||||||||||||||||||||
Beginning balance, July 1, 2017 | $ | 49,123 | $ | 77,052 | $ | 120,324 | $ | 246,499 | $ | 6 | $ | — | $ | 246,505 | $ | 67,995 | ||||||||||||||||
Transfers into Level 3 (3) | — | 23,501 | 11,961 | 35,462 | — | — | 35,462 | — | ||||||||||||||||||||||||
Transfers out of Level 3 (3) | — | 1 | (881 | ) | (880 | ) | — | — | (880 | ) | — | |||||||||||||||||||||
Total gains or losses | ||||||||||||||||||||||||||||||||
Net realized investment gains (losses) included in net income related to financial assets | — | (1 | ) | (160 | ) | (161 | ) | — | — | (161 | ) | — | ||||||||||||||||||||
Net realized (gains) losses included in net income related to financial liabilities | — | — | — | — | — | — | — | 2,587 | ||||||||||||||||||||||||
Net unrealized investment gains (losses) included in other comprehensive income | 382 | (192 | ) | (377 | ) | (187 | ) | — | — | (187 | ) | — | ||||||||||||||||||||
Purchases | — | — | — | — | — | — | — | — | ||||||||||||||||||||||||
Issuances | — | — | — | — | — | — | — | 3,752 | ||||||||||||||||||||||||
Sales | — | (1,999 | ) | — | (1,999 | ) | — | — | (1,999 | ) | — | |||||||||||||||||||||
Settlements | — | — | — | — | — | — | — | — | ||||||||||||||||||||||||
Paydowns, maturities and distributions | (293 | ) | (4,117 | ) | (9,249 | ) | (13,659 | ) | — | — | (13,659 | ) | (1,348 | ) | ||||||||||||||||||
Ending balance, September 30, 2017 | $ | 49,212 | $ | 94,245 | $ | 121,618 | $ | 265,075 | $ | 6 | $ | — | $ | 265,081 | $ | 72,986 | ||||||||||||||||
Beginning balance, January 1, 2017 | $ | 46,497 | $ | 60,191 | $ | 104,659 | $ | 211,347 | $ | 6 | $ | 751 | $ | 212,104 | $ | 59,393 | ||||||||||||||||
Transfers into Level 3 (3) | 5,214 | 55,420 | 36,482 | 97,116 | — | — | 97,116 | — | ||||||||||||||||||||||||
Transfers out of Level 3 (3) | (5,557 | ) | (11,962 | ) | (881 | ) | (18,400 | ) | — | (751 | ) | (19,151 | ) | — | ||||||||||||||||||
Total gains or losses | ||||||||||||||||||||||||||||||||
Net realized investment gains (losses) included in net income related to financial assets | — | (1 | ) | (1,874 | ) | (1,875 | ) | — | — | (1,875 | ) | — | ||||||||||||||||||||
Net realized (gains) losses included in net income related to financial liabilities | — | — | — | — | — | — | — | 6,133 | ||||||||||||||||||||||||
Net unrealized investment gains (losses) included in other comprehensive income | 3,540 | 263 | 1,945 | 5,748 | — | — | 5,748 | — | ||||||||||||||||||||||||
Purchases | — | — | — | — | — | — | — | — | ||||||||||||||||||||||||
Issuances | — | — | — | — | — | — | — | 10,538 | ||||||||||||||||||||||||
Sales | — | (1,999 | ) | — | (1,999 | ) | — | — | (1,999 | ) | — | |||||||||||||||||||||
Settlements | — | — | — | — | — | — | — | — | ||||||||||||||||||||||||
Paydowns, maturities and distributions | (482 | ) | (7,667 | ) | (18,713 | ) | (26,862 | ) | — | — | (26,862 | ) | (3,078 | ) | ||||||||||||||||||
Ending balance, September 30, 2017 | $ | 49,212 | $ | 94,245 | $ | 121,618 | $ | 265,075 | $ | 6 | $ | — | $ | 265,081 | $ | 72,986 |
Quarterly Report on Form 10-Q |
($ in thousands) | Financial Assets | Financial Liabilities (1) | ||||||||||||||||||||||||||||||||||||||||||
Municipal Bonds | Corporate Bonds | Other Mortgage- Backed Securities (2) | Total Fixed Maturity Securities | Equity Securities | Total | |||||||||||||||||||||||||||||||||||||||
Beginning balance, July 1, 2019 | $ | 46,984 | $ | 79,222 | $ | 128,438 | $ | 254,644 | $ | 69 | $ | 254,713 | $ | 85,961 | ||||||||||||||||||||||||||||||
Transfers into Level 3 (3) | 0 | 18,916 | 21,004 | 39,920 | 1 | 39,921 | 0 | |||||||||||||||||||||||||||||||||||||
Transfers out of Level 3 (3) | 0 | (2,822) | (449) | (3,271) | 0 | (3,271) | 0 | |||||||||||||||||||||||||||||||||||||
Total gains or losses | ||||||||||||||||||||||||||||||||||||||||||||
Net investment gains (losses) included in net income related to financial assets | 0 | 0 | 0 | 0 | 46 | 46 | — | |||||||||||||||||||||||||||||||||||||
Net investment (gains) losses included in net income related to financial liabilities | — | — | — | — | — | — | 3,661 | |||||||||||||||||||||||||||||||||||||
Net unrealized investment gains (losses) included in OCI | 842 | 1,744 | 397 | 2,983 | 0 | 2,983 | 0 | |||||||||||||||||||||||||||||||||||||
Purchases | 0 | 0 | 0 | 0 | 0 | 0 | 0 | |||||||||||||||||||||||||||||||||||||
Issuances | 0 | 0 | 0 | 0 | 0 | 0 | 2,033 | |||||||||||||||||||||||||||||||||||||
Sales | 0 | 0 | 0 | 0 | 0 | 0 | 0 | |||||||||||||||||||||||||||||||||||||
Settlements | 0 | 0 | 0 | 0 | 0 | 0 | 0 | |||||||||||||||||||||||||||||||||||||
Paydowns, maturities and distributions | (121) | (387) | (2,685) | (3,193) | 0 | (3,193) | (2,557) | |||||||||||||||||||||||||||||||||||||
Ending balance, September 30, 2019 | $ | 47,705 | $ | 96,673 | $ | 146,705 | $ | 291,083 | $ | 116 | $ | 291,199 | $ | 89,098 | ||||||||||||||||||||||||||||||
Beginning balance, January 1, 2019 | $ | 47,531 | $ | 80,742 | $ | 120,211 | $ | 248,484 | $ | 5 | $ | 248,489 | $ | 78,700 | ||||||||||||||||||||||||||||||
Transfers into Level 3 (3) | 0 | 24,798 | 42,938 | 67,736 | 65 | 67,801 | 0 | |||||||||||||||||||||||||||||||||||||
Transfers out of Level 3 (3) | 0 | (7,698) | (449) | (8,147) | 0 | (8,147) | 0 | |||||||||||||||||||||||||||||||||||||
Total gains or losses | ||||||||||||||||||||||||||||||||||||||||||||
Net investment gains (losses) included in net income related to financial assets | 0 | 0 | 0 | 0 | 46 | 46 | — | |||||||||||||||||||||||||||||||||||||
Net investment (gains) losses included in net income related to financial liabilities | — | — | — | — | — | — | 8,366 | |||||||||||||||||||||||||||||||||||||
Net unrealized investment gains (losses) included in OCI | 649 | 6,254 | 3,052 | 9,955 | 0 | 9,955 | 0 | |||||||||||||||||||||||||||||||||||||
Purchases | 0 | 1,566 | 0 | 1,566 | 0 | 1,566 | 0 | |||||||||||||||||||||||||||||||||||||
Issuances | 0 | 0 | 0 | 0 | 0 | 0 | 7,482 | |||||||||||||||||||||||||||||||||||||
Sales | 0 | 0 | (607) | (607) | 0 | (607) | 0 | |||||||||||||||||||||||||||||||||||||
Settlements | 0 | 0 | 0 | 0 | 0 | 0 | 0 | |||||||||||||||||||||||||||||||||||||
Paydowns, maturities and distributions | (475) | (8,989) | (18,440) | (27,904) | 0 | (27,904) | (5,450) | |||||||||||||||||||||||||||||||||||||
Ending balance, September 30, 2019 | $ | 47,705 | $ | 96,673 | $ | 146,705 | $ | 291,083 | $ | 116 | $ | 291,199 | $ | 89,098 |
($ in thousands) | Financial Assets | Financial Liabilities(1) | ||||||||||||||||||||||||||||||
Municipal Bonds | Corporate Bonds | Mortgage- Backed Securities (2) | Total Fixed Maturity Securities | Equity Securities | Short-term Investments | Total | ||||||||||||||||||||||||||
Beginning balance, July 1, 2016 | $ | 47,647 | $ | 73,408 | $ | 96,581 | $ | 217,636 | $ | 6 | $ | — | $ | 217,642 | $ | 47,706 | ||||||||||||||||
Transfers into Level 3 (3) | — | 10,375 | 7,655 | 18,030 | — | — | 18,030 | — | ||||||||||||||||||||||||
Transfers out of Level 3 (3) | — | (5,967 | ) | (788 | ) | (6,755 | ) | — | — | (6,755 | ) | — | ||||||||||||||||||||
Total gains or losses | ||||||||||||||||||||||||||||||||
Net realized investment gains (losses) included in net income related to financial assets | — | 1 | (56 | ) | (55 | ) | — | — | (55 | ) | — | |||||||||||||||||||||
Net realized (gains) losses included in net income related to financial liabilities | — | — | — | — | — | — | — | 68 | ||||||||||||||||||||||||
Net unrealized investment gains (losses) included in other comprehensive income | (2,361 | ) | 1,292 | 3,951 | 2,882 | — | — | 2,882 | — | |||||||||||||||||||||||
Purchases | — | — | — | — | — | — | — | — | ||||||||||||||||||||||||
Issuances | — | — | — | — | — | — | — | 6,710 | ||||||||||||||||||||||||
Sales | — | — | — | — | — | — | — | — | ||||||||||||||||||||||||
Settlements | — | — | — | — | — | — | — | — | ||||||||||||||||||||||||
Paydowns, maturities and distributions | (120 | ) | (1,488 | ) | (5,194 | ) | (6,802 | ) | — | — | (6,802 | ) | 695 | |||||||||||||||||||
Ending balance, September 30, 2016 | $ | 45,166 | $ | 77,621 | $ | 102,149 | $ | 224,936 | $ | 6 | $ | — | $ | 224,942 | $ | 55,179 | ||||||||||||||||
Beginning balance, January 1, 2016 | $ | 30,379 | $ | 67,575 | $ | 75,466 | $ | 173,420 | $ | 6 | $ | — | $ | 173,426 | $ | 39,021 | ||||||||||||||||
Transfers into Level 3 (3) | 14,751 | 21,451 | 32,281 | 68,483 | — | — | 68,483 | — | ||||||||||||||||||||||||
Transfers out of Level 3 (3) | — | (5,967 | ) | (788 | ) | (6,755 | ) | — | — | (6,755 | ) | — | ||||||||||||||||||||
Total gains or losses | ||||||||||||||||||||||||||||||||
Net realized investment gains (losses) included in net income related to financial assets | — | (656 | ) | (56 | ) | (712 | ) | — | — | (712 | ) | — | ||||||||||||||||||||
Net realized (gains) losses included in net income related to financial liabilities | — | — | — | — | — | — | — | 2,066 | ||||||||||||||||||||||||
Net unrealized investment gains (losses) included in other comprehensive income | 420 | 3,073 | 4,173 | 7,666 | — | — | 7,666 | — | ||||||||||||||||||||||||
Purchases | — | — | — | — | — | — | — | — | ||||||||||||||||||||||||
Issuances | — | — | — | — | — | — | — | 15,194 | ||||||||||||||||||||||||
Sales | — | — | — | — | — | — | — | — | ||||||||||||||||||||||||
Settlements | — | — | — | — | — | — | — | — | ||||||||||||||||||||||||
Paydowns, maturities and distributions | (384 | ) | (7,855 | ) | (8,927 | ) | (17,166 | ) | — | — | (17,166 | ) | (1,102 | ) | ||||||||||||||||||
Ending balance, September 30, 2016 | $ | 45,166 | $ | 77,621 | $ | 102,149 | $ | 224,936 | $ | 6 | $ | — | $ | 224,942 | $ | 55,179 |
Horace Mann Educators Corporation | 18 | Quarterly Report on Form 10-Q |
($ in thousands) | ||||||||||||||||||||||||||
Financial Assets | Fair Value at September 30, 2020 | Valuation Technique(s) | Unobservable Inputs | Range (Weighted Average) and Single Point Best Estimate (1) | ||||||||||||||||||||||
Municipal bonds | $ | 65,671 | discounted cash flow | I spread (2) | 578 bps | |||||||||||||||||||||
Corporate bonds | 121,185 | discounted cash flow | N spread (3) | 320 - 818 bps | ||||||||||||||||||||||
market comparable | option adjusted spread | 12.54% | ||||||||||||||||||||||||
Other asset-backed securities | 128,599 | vendor price | haircut | 3.00% - 5.00% | ||||||||||||||||||||||
discounted cash flow | constant prepayment rate | 20.00% | ||||||||||||||||||||||||
discounted cash flow | T spread (4) | 235 - 800 bps | ||||||||||||||||||||||||
discounted cash flow | PDI interest margin (5) | 7.13% | ||||||||||||||||||||||||
discounted cash flow | SBL interest margin (6) | 4.50% | ||||||||||||||||||||||||
Government mortgage-backed securities | 12,199 | vendor price | haircut | 3.00% - 5.00% | ||||||||||||||||||||||
Equity securities | 88 | Black Scholes | equity value | low - $43.27; high - $44.53 |
($ in thousands) | ||||||||||||||||||||||||||
Financial Liabilities | Fair Value at September 30, 2020 | Valuation Technique(s) | Unobservable Inputs | Range (Weighted Average) and Single Point Best Estimate (1) | ||||||||||||||||||||||
Derivatives embedded in fixed indexed annuity products | $ | 98,070 | discounted cash flow | lapse rate | 5.25% | |||||||||||||||||||||
mortality multiplier (7) | 61.00% | |||||||||||||||||||||||||
option budget | 1.00% - 2.50% | |||||||||||||||||||||||||
non-performance adjustment (8) | 5.00% |
Horace Mann Educators Corporation | 19 | Quarterly Report on Form 10-Q |
($ in thousands) | Fair Value Measurements at | |||||||||||||||||||||||||||||||
Carrying | Fair | Reporting Date Using | ||||||||||||||||||||||||||||||
Amount | Value | Level 1 | Level 2 | Level 3 | ||||||||||||||||||||||||||||
September 30, 2020 | ||||||||||||||||||||||||||||||||
Financial Assets | ||||||||||||||||||||||||||||||||
Investments | ||||||||||||||||||||||||||||||||
Other investments | $ | 168,500 | $ | 172,303 | $ | 0 | $ | 0 | $ | 172,303 | ||||||||||||||||||||||
Deposit asset on reinsurance | 2,402,539 | 2,925,672 | 0 | 0 | 2,925,672 | |||||||||||||||||||||||||||
Financial Liabilities | ||||||||||||||||||||||||||||||||
Investment contract and policy reserves, fixed annuity contracts | 4,812,911 | 4,720,941 | 0 | 0 | 4,720,941 | |||||||||||||||||||||||||||
Investment contract and policy reserves, account values on life contracts | 97,522 | 102,290 | 0 | 0 | 102,290 | |||||||||||||||||||||||||||
Other policyholder funds | 646,424 | 646,424 | 0 | 590,687 | 55,737 | |||||||||||||||||||||||||||
Short-term debt | 135,000 | 135,000 | 0 | 0 | 135,000 | |||||||||||||||||||||||||||
Long-term debt | 302,247 | 331,829 | 0 | 331,829 | 0 | |||||||||||||||||||||||||||
December 31, 2019 | ||||||||||||||||||||||||||||||||
Financial Assets | ||||||||||||||||||||||||||||||||
Investments | ||||||||||||||||||||||||||||||||
Other investments | $ | 163,312 | $ | 167,185 | $ | 0 | $ | 0 | $ | 167,185 | ||||||||||||||||||||||
Deposit asset on reinsurance | 2,346,166 | 2,634,012 | 0 | 0 | 2,634,012 | |||||||||||||||||||||||||||
Financial Liabilities | ||||||||||||||||||||||||||||||||
Investment contract and policy reserves, fixed annuity contracts | 4,675,774 | 4,609,880 | 0 | 0 | 4,609,880 | |||||||||||||||||||||||||||
Investment contract and policy reserves, account values on life contracts | 93,465 | 98,332 | 0 | 0 | 98,332 | |||||||||||||||||||||||||||
Other policyholder funds | 553,550 | 553,550 | 0 | 495,812 | 57,738 | |||||||||||||||||||||||||||
Short-term debt | 135,000 | 135,000 | 0 | 0 | 135,000 | |||||||||||||||||||||||||||
Long-term debt | 298,025 | 322,678 | 0 | 322,678 | 0 |
Horace Mann Educators Corporation | 20 | Quarterly Report on Form 10-Q |
($ in thousands) | Fair Value Measurements at | |||||||||||||||||||
Carrying | Fair | Reporting Date Using | ||||||||||||||||||
Amount | Value | Level 1 | Level 2 | Level 3 | ||||||||||||||||
September 30, 2017 | ||||||||||||||||||||
Financial Assets | ||||||||||||||||||||
Investments | ||||||||||||||||||||
Other investments | $ | 154,630 | $ | 159,253 | $ | — | $ | — | $ | 159,253 | ||||||||||
Financial Liabilities | ||||||||||||||||||||
Investment contract reserves | 4,428,989 | 4,338,318 | — | — | 4,338,318 | |||||||||||||||
Life policy reserves, account values on life contracts | 81,520 | 86,906 | — | — | 86,906 | |||||||||||||||
Other policyholder funds | 644,383 | 644,383 | — | 575,579 | 68,804 | |||||||||||||||
Long-term debt | 247,403 | 264,781 | 264,781 | — | — | |||||||||||||||
December 31, 2016 | ||||||||||||||||||||
Financial Assets | ||||||||||||||||||||
Investments | ||||||||||||||||||||
Other investments | $ | 151,965 | $ | 156,536 | $ | — | $ | — | $ | 156,536 | ||||||||||
Financial Liabilities | ||||||||||||||||||||
Investment contract reserves | 4,360,456 | 4,280,528 | — | — | 4,280,528 | |||||||||||||||
Life policy reserves, account values on life contracts | 79,591 | 85,066 | — | — | 85,066 | |||||||||||||||
Other policyholder funds | 649,557 | 649,557 | — | 575,253 | 74,304 | |||||||||||||||
Long-term debt | 247,209 | 248,191 | 248,191 | — | — |
($ in thousands) | September 30, 2020 | December 31, 2019 | ||||||||||||
Assets | ||||||||||||||
Derivatives, included in Short-term and other investments | $ | 10,793 | $ | 13,239 | ||||||||||
Liabilities | ||||||||||||||
FIA - embedded derivatives, included in Other policyholder funds | 98,070 | 93,733 | ||||||||||||
IUL - embedded derivatives, included in Investment contract and policy reserves | 1,703 | 1,314 |
($ in thousands) | September 30, 2017 | December 31, 2016 | ||||||
Assets | ||||||||
Derivative instruments, included in Short-term and other investments | $ | 10,431 | $ | 8,694 | ||||
Liabilities | ||||||||
FIA - embedded derivatives, included in Other policyholder funds | $ | 72,986 | $ | 59,393 | ||||
IUL - embedded derivatives, included in Investment contract and life policy reserves | 390 | 158 |
($ in thousands) | Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||||||||||||
2020 | 2019 | 2020 | 2019 | |||||||||||||||||||||||
Change in fair value of derivatives: (1) | ||||||||||||||||||||||||||
Net investment gains (losses) | $ | 2,666 | $ | (149) | $ | (5,124) | $ | 5,280 | ||||||||||||||||||
Change in fair value of embedded derivatives: | ||||||||||||||||||||||||||
Net investment gains (losses) | (5,118) | (3,691) | (5,438) | (8,952) |
($ in thousands) | Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||
2017 | 2016 | 2017 | 2016 | |||||||||||||
Change in fair value of derivatives (1): | ||||||||||||||||
Revenues | ||||||||||||||||
Net realized investment gains | $ | 2,943 | $ | 562 | $ | 7,109 | $ | 422 | ||||||||
Change in fair value of embedded derivatives: | ||||||||||||||||
Revenues | ||||||||||||||||
Net realized investment losses | $ | (2,702 | ) | $ | (76 | ) | $ | (6,363 | ) | $ | (2,077 | ) |
Quarterly Report on Form 10-Q |
($ in thousands) | September 30, 2020 | December 31, 2019 | ||||||||||||||||||||||||||||||||||||
Credit Rating | Notional | Fair | Notional | Fair | ||||||||||||||||||||||||||||||||||
Counterparty | S&P | Moody's | Amount | Value | Amount | Value | ||||||||||||||||||||||||||||||||
Bank of America, N.A. | A+ | Aa2 | $ | 198,100 | $ | 9,135 | $ | 174,900 | $ | 8,523 | ||||||||||||||||||||||||||||
Barclays Bank PLC | A | A1 | 98,900 | 1,658 | 115,300 | 3,347 | ||||||||||||||||||||||||||||||||
Citigroup Inc. | BBB+ | A3 | 0 | 0 | 0 | 0 | ||||||||||||||||||||||||||||||||
Credit Suisse International | A+ | A1 | 0 | 0 | 0 | 0 | ||||||||||||||||||||||||||||||||
Societe Generale | A | A1 | 0 | 0 | 27,800 | 1,369 | ||||||||||||||||||||||||||||||||
Total | $ | 297,000 | $ | 10,793 | $ | 318,000 | $ | 13,239 |
($ in thousands) | September 30, 2017 | December 31, 2016 | ||||||||||||||||
Credit Rating | Notional | Fair | Notional | Fair | ||||||||||||||
Counterparty | S&P | Amount | Value | Amount | Value | |||||||||||||
Bank of America, N.A. | A+ | $ | 74,400 | $ | 2,466 | $ | 38,500 | $ | 1,934 | |||||||||
Barclays Bank PLC | A | 68,900 | 3,017 | 66,800 | 1,543 | |||||||||||||
Citigroup Inc. | BBB+ | — | — | — | — | |||||||||||||
Credit Suisse International | A | 29,100 | 2,041 | 65,200 | 4,281 | |||||||||||||
Societe Generale | A | 68,900 | 2,907 | 15,600 | 936 | |||||||||||||
Total | $ | 241,300 | $ | 10,431 | $ | 186,100 | $ | 8,694 |
Horace Mann Educators Corporation | 22 | Quarterly Report on Form 10-Q |
($ in thousands) | September 30, 2020 | |||||||||||||||||||||||||
Property and Casualty | $ | 9,460 | ||||||||||||||||||||||||
Supplemental | 19,621 | |||||||||||||||||||||||||
Retirement | 10,087 | |||||||||||||||||||||||||
Life | 9,911 | |||||||||||||||||||||||||
Total | $ | 49,079 |
($ in thousands) | Weighted Average | |||||||||||||
Useful Life (in Years) | ||||||||||||||
At inception: | ||||||||||||||
Value of business acquired | 30 | $ | 94,419 | |||||||||||
Value of distribution acquired | 17 | 53,996 | ||||||||||||
Value of agency relationships | 14 | 16,981 | ||||||||||||
Value of customer relationships | 10 | 9,080 | ||||||||||||
Total | 23 | 174,476 | ||||||||||||
Accumulated amortization: | ||||||||||||||
Value of business acquired | (9,113) | |||||||||||||
Value of distribution acquired | (4,355) | |||||||||||||
Value of agency relationships | (3,417) | |||||||||||||
Value of customer relationships | (2,835) | |||||||||||||
Total | (19,720) | |||||||||||||
Net intangible assets subject to amortization: | $ | 154,756 |
Horace Mann Educators Corporation | 23 | Quarterly Report on Form 10-Q |
($ in thousands) | ||||||||
Year Ending December 31, | ||||||||
2020 (excluding the nine months ended September 30, 2020) | $ | 3,558 | ||||||
2021 | 13,411 | |||||||
2022 | 12,433 | |||||||
2023 | 11,577 | |||||||
2024 | 10,805 | |||||||
Thereafter | 102,972 | |||||||
Total | $ | 154,756 |
($ in thousands) | ||||||||
Trade names | $ | 8,645 | ||||||
State licenses | 2,886 | |||||||
Total | $ | 11,531 |
Horace Mann Educators Corporation | 24 | Quarterly Report on Form 10-Q |
($ in thousands) | Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||||||||||||
2020 | 2019 | 2020 | 2019 | |||||||||||||||||||||||
Property and Casualty | ||||||||||||||||||||||||||
Beginning gross reserves (1) | $ | 388,491 | $ | 367,862 | $ | 386,976 | $ | 367,180 | ||||||||||||||||||
Less: reinsurance recoverables | 116,083 | 77,345 | 120,506 | 89,725 | ||||||||||||||||||||||
Net reserves, beginning of period (2) | 272,408 | 290,517 | 266,470 | 277,455 | ||||||||||||||||||||||
Incurred claims and claim expenses: | ||||||||||||||||||||||||||
Claims occurring in the current period | 125,622 | 122,470 | 340,243 | 375,648 | ||||||||||||||||||||||
Decrease in estimated reserves for claims occurring in prior periods (3) | (7,200) | (3,500) | (9,200) | (7,500) | ||||||||||||||||||||||
Total claims and claim expenses incurred (4) | 118,422 | 118,970 | 331,043 | 368,148 | ||||||||||||||||||||||
Claims and claim expense payments for claims occurring during: | ||||||||||||||||||||||||||
Current period | 91,008 | 101,499 | 195,891 | 230,968 | ||||||||||||||||||||||
Prior periods | 19,280 | 29,747 | 121,080 | 136,394 | ||||||||||||||||||||||
Total claims and claim expense payments | 110,288 | 131,246 | 316,971 | 367,362 | ||||||||||||||||||||||
Net reserves, end of period (2) | 280,542 | 278,241 | 280,542 | 278,241 | ||||||||||||||||||||||
Plus: reinsurance recoverables | 114,773 | 76,526 | 114,773 | 76,526 | ||||||||||||||||||||||
Ending gross reserves (1) | $ | 395,315 | $ | 354,767 | $ | 395,315 | $ | 354,767 |
($ in thousands) | Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||
2017 | 2016 | 2017 | 2016 | |||||||||||||
Property and Casualty segment | ||||||||||||||||
Beginning Gross reserves (1) | $ | 329,831 | $ | 320,961 | $ | 307,757 | $ | 301,569 | ||||||||
Less: reinsurance recoverables | 58,897 | 60,499 | 61,199 | 50,332 | ||||||||||||
Net reserves, beginning of period (2) | 270,934 | 260,462 | 246,558 | 251,237 | ||||||||||||
Incurred claims and claim expenses: | ||||||||||||||||
Claims occurring in the current period | 115,393 | 116,709 | 386,945 | 351,270 | ||||||||||||
Decrease in estimated reserves for claims occurring in prior periods (3) | (500 | ) | (700 | ) | (2,100 | ) | (4,300 | ) | ||||||||
Total claims and claim expenses incurred (4) | 114,893 | 116,009 | 384,845 | 346,970 | ||||||||||||
Claims and claim expense payments for claims occurring during: | ||||||||||||||||
Current period | 97,188 | 99,832 | 245,213 | 228,462 | ||||||||||||
Prior periods | 28,054 | 27,976 | 125,605 | 121,082 | ||||||||||||
Total claims and claim expense payments | 125,242 | 127,808 | 370,818 | 349,544 | ||||||||||||
Net reserves, end of period (2) | 260,585 | 248,663 | 260,585 | 248,663 | ||||||||||||
Plus: reinsurance recoverables | 57,302 | 61,893 | 57,302 | 61,893 | ||||||||||||
Ending Gross reserves (1) | $ | 317,887 | $ | 310,556 | $ | 317,887 | $ | 310,556 |
Horace Mann Educators Corporation | 25 | Quarterly Report on Form 10-Q |
($ in thousands) | September 30, 2017 | December 31, 2016 | ||||||
Short-term debt: | ||||||||
Bank Credit Facility, expires July 30, 2019 | $ | — | $ | — | ||||
Long-term debt: | ||||||||
4.50% Senior Notes, due December 1, 2025. Aggregate principal amount of $250,000 thousand less unaccrued discount of $561 thousand and $603 thousand (4.5% imputed rate) and unamortized debt issuance costs of $2,036 thousand and $2,188 thousand | 247,403 | 247,209 |
($ in thousands) | Gross Amount | Ceded to Other Companies (1) | Assumed from Other Companies | Net Amount | ||||||||||||||||||||||
Three months ended September 30, 2020 | ||||||||||||||||||||||||||
Premiums written and contract deposits (2) | $ | 368,577 | $ | 2,146 | $ | 2,422 | $ | 368,853 | ||||||||||||||||||
Premiums and contract charges earned | 237,193 | 4,261 | 2,421 | 235,353 | ||||||||||||||||||||||
Benefits, claims and settlement expenses | 59,401 | (90,161) | 1,863 | 151,425 | ||||||||||||||||||||||
Three months ended September 30, 2019 | ||||||||||||||||||||||||||
Premiums written and contract deposits (2) | $ | 374,598 | $ | 5,968 | $ | 2,586 | $ | 371,216 | ||||||||||||||||||
Premiums and contract charges earned | 245,200 | 8,181 | 2,662 | 239,681 | ||||||||||||||||||||||
Benefits, claims and settlement expenses | 154,718 | 2,310 | 1,783 | 154,191 | ||||||||||||||||||||||
Nine months ended September 30, 2020 | ||||||||||||||||||||||||||
Premiums written and contract deposits (2) | $ | 1,034,687 | $ | 14,835 | $ | 6,928 | $ | 1,026,780 | ||||||||||||||||||
Premiums and contract charges earned | 710,998 | 20,945 | 6,996 | 697,049 | ||||||||||||||||||||||
Benefits, claims and settlement expenses | 342,218 | (85,770) | 5,107 | 433,095 | ||||||||||||||||||||||
Nine months ended September 30, 2019 | ||||||||||||||||||||||||||
Premiums written and contract deposits (2) | $ | 988,588 | $ | 17,844 | $ | 7,557 | $ | 978,301 | ||||||||||||||||||
Premiums and contract charges earned | 671,871 | 22,158 | 7,849 | 657,562 | ||||||||||||||||||||||
Benefits, claims and settlement expenses | 450,206 | 9,399 | 5,460 | 446,267 |
($ in thousands) | Gross Amount | Ceded to Other Companies | Assumed from Other Companies | Net Amount | ||||||||||||
Three months ended September 30, 2017 | ||||||||||||||||
Premiums written and contract deposits | $ | 322,428 | $ | 5,189 | $ | 1,116 | $ | 318,355 | ||||||||
Premiums and contract charges earned | 202,988 | 5,216 | 1,163 | 198,935 | ||||||||||||
Benefits, claims and settlement expenses | 135,508 | 1,831 | 1,218 | 134,895 | ||||||||||||
Three months ended September 30, 2016 | ||||||||||||||||
Premiums written and contract deposits | $ | 356,155 | $ | 5,555 | $ | 934 | $ | 351,534 | ||||||||
Premiums and contract charges earned | 195,654 | 5,584 | 980 | 191,050 | ||||||||||||
Benefits, claims and settlement expenses | 139,114 | 4,642 | 1,238 | 135,710 | ||||||||||||
Nine months ended September 30, 2017 | ||||||||||||||||
Premiums written and contract deposits | $ | 940,063 | $ | 16,342 | $ | 2,980 | $ | 926,701 | ||||||||
Premiums and contract charges earned | 603,794 | 16,415 | 2,996 | 590,375 | ||||||||||||
Benefits, claims and settlement expenses | 450,997 | 8,899 | 2,772 | 444,870 | ||||||||||||
Nine months ended September 30, 2016 | ||||||||||||||||
Premiums written and contract deposits | $ | 960,945 | $ | 17,244 | $ | 2,881 | $ | 946,582 | ||||||||
Premiums and contract charges earned | 579,283 | 17,305 | 2,882 | 564,860 | ||||||||||||
Benefits, claims and settlement expenses | 422,352 | 21,748 | 3,027 | 403,631 |
($ in thousands) | Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||||||||||||
2020 | 2019 | 2020 | 2019 | |||||||||||||||||||||||
Insurance premiums and contract charges earned | ||||||||||||||||||||||||||
Property and Casualty | $ | 166,070 | $ | 170,483 | $ | 488,756 | $ | 512,626 | ||||||||||||||||||
Supplemental (1) | 32,480 | 32,921 | 98,772 | 32,921 | ||||||||||||||||||||||
Retirement | 7,389 | 6,624 | 21,486 | 22,133 | ||||||||||||||||||||||
Life | 29,414 | 29,653 | 88,035 | 89,882 | ||||||||||||||||||||||
Total | $ | 235,353 | $ | 239,681 | $ | 697,049 | $ | 657,562 | ||||||||||||||||||
Net investment income | ||||||||||||||||||||||||||
Property and Casualty | $ | 13,632 | $ | 10,726 | $ | 30,250 | $ | 33,587 | ||||||||||||||||||
Supplemental (1) | 4,321 | 3,691 | 11,876 | 3,691 | ||||||||||||||||||||||
Retirement | 58,115 | 60,770 | 166,684 | 188,193 | ||||||||||||||||||||||
Life | 18,244 | 18,453 | 49,432 | 54,829 | ||||||||||||||||||||||
Corporate and Other | (30) | 0 | (142) | (37) | ||||||||||||||||||||||
Intersegment eliminations | (564) | (569) | (1,697) | (934) | ||||||||||||||||||||||
Total | $ | 93,718 | $ | 93,071 | $ | 256,403 | $ | 279,329 | ||||||||||||||||||
Net income (loss) | ||||||||||||||||||||||||||
Property and Casualty | $ | 15,810 | $ | 14,194 | $ | 53,669 | $ | 34,347 | ||||||||||||||||||
Supplemental (1) | 10,546 | 6,943 | 30,562 | 6,943 | ||||||||||||||||||||||
Retirement | 7,792 | 5,915 | 16,578 | (6,979) | ||||||||||||||||||||||
Life | 4,306 | 5,101 | 6,869 | 13,617 | ||||||||||||||||||||||
Corporate and Other | (1,980) | (6,699) | (22,154) | 103,514 | ||||||||||||||||||||||
Total | $ | 36,474 | $ | 25,454 | $ | 85,524 | $ | 151,442 |
($ in thousands) | September 30, 2020 | December 31, 2019 | ||||||||||||
Assets | ||||||||||||||
Property and Casualty | $ | 1,354,685 | $ | 1,327,099 | ||||||||||
Supplemental | 828,760 | 747,602 | ||||||||||||
Retirement | 8,609,262 | 8,330,127 | ||||||||||||
Life | 2,108,067 | 1,964,993 | ||||||||||||
Corporate and Other | 167,697 | 172,955 | ||||||||||||
Intersegment eliminations | (65,083) | (64,072) | ||||||||||||
Total | $ | 13,003,388 | $ | 12,478,704 |
($ in thousands) | Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||
2017 | 2016 | 2017 | 2016 | |||||||||||||
Insurance premiums and contract charges earned | ||||||||||||||||
Property and Casualty | $ | 163,209 | $ | 155,727 | $ | 481,987 | $ | 461,520 | ||||||||
Retirement | 7,393 | 6,448 | 20,753 | 18,614 | ||||||||||||
Life | 28,333 | 28,875 | 87,635 | 84,726 | ||||||||||||
Total | $ | 198,935 | $ | 191,050 | $ | 590,375 | $ | 564,860 | ||||||||
Net investment income | ||||||||||||||||
Property and Casualty | $ | 9,167 | $ | 10,018 | $ | 26,457 | $ | 28,997 | ||||||||
Retirement | 64,340 | 66,174 | 192,921 | 186,950 | ||||||||||||
Life | 18,999 | 18,852 | 56,215 | 55,338 | ||||||||||||
Corporate and Other | 17 | 15 | 47 | 44 | ||||||||||||
Intersegment eliminations | (203 | ) | (212 | ) | (615 | ) | (644 | ) | ||||||||
Total | $ | 92,320 | $ | 94,847 | $ | 275,025 | $ | 270,685 | ||||||||
Net income (loss) | ||||||||||||||||
Property and Casualty | $ | 13,407 | $ | 6,715 | $ | 2,186 | $ | 16,047 | ||||||||
Retirement | 13,603 | 15,732 | 36,933 | 39,348 | ||||||||||||
Life | 4,788 | 4,583 | 14,283 | 13,072 | ||||||||||||
Corporate and Other | (5,247 | ) | (107 | ) | (9,272 | ) | (4,525 | ) | ||||||||
Total | $ | 26,551 | $ | 26,923 | $ | 44,130 | $ | 63,942 |
($ in thousands) | September 30, 2017 | December 31, 2016 | ||||||
Assets | ||||||||
Property and Casualty | $ | 1,156,959 | $ | 1,110,958 | ||||
Retirement | 7,793,727 | 7,449,777 | ||||||
Life | 1,988,767 | 1,912,771 | ||||||
Corporate and Other | 135,876 | 140,104 | ||||||
Intersegment eliminations | (30,981 | ) | (36,786 | ) | ||||
Total | $ | 11,044,348 | $ | 10,576,824 |
($ in thousands) | Net Unrealized Investment Gains (Losses) on Securities (1)(2) | Net Funded Status of Benefit Plans (1) | Total (1) | |||||||||||||||||
Beginning balance, July 1, 2020 | $ | 279,129 | $ | (10,767) | $ | 268,362 | ||||||||||||||
Other comprehensive income (loss) before reclassifications | 54,312 | 0 | 54,312 | |||||||||||||||||
Amounts reclassified from AOCI | (5,244) | 0 | (5,244) | |||||||||||||||||
Net current period other comprehensive income (loss) | 49,068 | 0 | 49,068 | |||||||||||||||||
Ending balance, September 30, 2020 | $ | 328,197 | $ | (10,767) | $ | 317,430 | ||||||||||||||
Beginning balance, January 1, 2020 | $ | 230,448 | $ | (10,767) | $ | 219,681 | ||||||||||||||
Other comprehensive income (loss) before reclassifications | 97,311 | 0 | 97,311 | |||||||||||||||||
Amounts reclassified from AOCI | 438 | 0 | 438 | |||||||||||||||||
Net current period other comprehensive income (loss) | 97,749 | 0 | 97,749 | |||||||||||||||||
Ending balance, September 30, 2020 | $ | 328,197 | $ | (10,767) | $ | 317,430 |
($ in thousands) | Net Unrealized Investment Gains (Losses) on Securities (1)(2) | Net Funded Status of Benefit Plans (1) | Total (1) | |||||||||||||||||
Beginning balance, July 1, 2019 | $ | 203,077 | $ | (12,185) | $ | 190,892 | ||||||||||||||
Other comprehensive income (loss) before reclassifications | 64,577 | 0 | 64,577 | |||||||||||||||||
Amounts reclassified from AOCI | (1,273) | 0 | (1,273) | |||||||||||||||||
Net current period other comprehensive income (loss) | 63,304 | 0 | 63,304 | |||||||||||||||||
Ending balance, September 30, 2019 | $ | 266,381 | $ | (12,185) | $ | 254,196 | ||||||||||||||
Beginning balance, January 1, 2019 | $ | 96,941 | $ | (12,185) | $ | 84,756 | ||||||||||||||
Other comprehensive income (loss) before reclassifications | 292,043 | 0 | 292,043 | |||||||||||||||||
Amounts reclassified from AOCI | (122,603) | 0 | (122,603) | |||||||||||||||||
Net current period other comprehensive income (loss) | 169,440 | 0 | 169,440 | |||||||||||||||||
Ending balance, September 30, 2019 | $ | 266,381 | $ | (12,185) | $ | 254,196 |
Horace Mann Educators Corporation | 28 | Quarterly Report on Form 10-Q |
($ in thousands) | September 30, | December 31, | ||||||||||||
2020 | 2019 | |||||||||||||
Cash | $ | 64,778 | $ | 25,206 | ||||||||||
Restricted cash | 697 | 302 | ||||||||||||
Total cash and restricted cash shown in the Consolidated Balance Sheets | $ | 65,475 | $ | 25,508 |
($ in thousands) | Nine Months Ended September 30, | |||||||||||||
2020 | 2019 | |||||||||||||
Cash paid during the nine months for: | ||||||||||||||
Interest | $ | 9,258 | $ | 6,948 | ||||||||||
Income taxes | 18,456 | 12,696 |
Horace Mann Educators Corporation | 29 | Quarterly Report on Form 10-Q |
Horace Mann Educators Corporation | 30 | Quarterly Report on Form 10-Q |
($ in millions) | Three Months Ended September 30, | 2020-2019 | Nine Months Ended September 30, | 2020-2019 | ||||||||||||||||||||||||||||||||||
2020 | 2019 | Change % | 2020 | 2019 | Change % | |||||||||||||||||||||||||||||||||
Total revenues | $ | 337.1 | $ | 336.6 | 0.1 | % | $ | 958.1 | $ | 1,105.4 | -13.3 | % | ||||||||||||||||||||||||||
Net income | 36.5 | 25.4 | 43.7 | % | 85.5 | 151.4 | -43.5 | % | ||||||||||||||||||||||||||||||
Per diluted share: | ||||||||||||||||||||||||||||||||||||||
Net income | 0.87 | 0.60 | 45.0 | % | 2.03 | 3.61 | -43.8 | % | ||||||||||||||||||||||||||||||
Net investment gains (losses), after tax | 0.05 | (0.04) | N.M. | (0.24) | 2.84 | N.M. | ||||||||||||||||||||||||||||||||
Book value per share | $ | 41.45 | $ | 38.30 | 8.2 | % | ||||||||||||||||||||||||||||||||
Net income return on equity - last twelve months | 7.4 | % | 9.2 | % | ||||||||||||||||||||||||||||||||||
Net income return on equity - annualized | 6.9 | % | 14.1 | % |
Horace Mann Educators Corporation | 31 | Quarterly Report on Form 10-Q |
($ in millions) | Three Months Ended September 30, | 2020-2019 | Nine Months Ended September 30, | 2020-2019 | ||||||||||||||||||||||||||||||||||
2020 | 2019 | Change % | 2020 | 2019 | Change % | |||||||||||||||||||||||||||||||||
Insurance premiums and contract charges earned | $ | 235.3 | $ | 239.7 | -1.8 | % | $ | 697.0 | $ | 657.6 | 6.0 | % | ||||||||||||||||||||||||||
Net investment income | 93.7 | 93.0 | 0.8 | % | 256.4 | 279.3 | -8.2 | % | ||||||||||||||||||||||||||||||
Net investment gains (losses) | 2.5 | (2.1) | N.M. | (12.8) | 151.6 | N.M. | ||||||||||||||||||||||||||||||||
Other income | 5.6 | 6.0 | -6.7 | % | 17.5 | 16.9 | 3.6 | % | ||||||||||||||||||||||||||||||
Total revenues | 337.1 | 336.6 | 0.1 | % | 958.1 | 1,105.4 | -13.3 | % | ||||||||||||||||||||||||||||||
Benefits, claims and settlement expenses | 151.4 | 154.2 | -1.8 | % | 433.1 | 446.3 | -3.0 | % | ||||||||||||||||||||||||||||||
Interest credited | 51.1 | 53.6 | -4.7 | % | 153.3 | 160.1 | -4.2 | % | ||||||||||||||||||||||||||||||
Operating expenses | 57.9 | 63.6 | -9.0 | % | 173.1 | 175.9 | -1.6 | % | ||||||||||||||||||||||||||||||
DAC unlocking and amortization expense | 24.6 | 26.3 | -6.5 | % | 75.0 | 82.9 | -9.5 | % | ||||||||||||||||||||||||||||||
Intangible asset amortization expense | 3.5 | 3.8 | -7.9 | % | 10.9 | 4.9 | 122.4 | % | ||||||||||||||||||||||||||||||
Interest expense | 3.5 | 4.6 | -23.9 | % | 11.7 | 11.2 | 4.5 | % | ||||||||||||||||||||||||||||||
Other expense - goodwill impairment | — | — | — | — | 28.0 | N.M. | ||||||||||||||||||||||||||||||||
Total benefits, losses and expenses | 292.0 | 306.1 | -4.6 | % | 857.1 | 909.3 | -5.7 | % | ||||||||||||||||||||||||||||||
Income before income taxes | 45.1 | 30.5 | 47.9 | % | 101.0 | 196.1 | -48.5 | % | ||||||||||||||||||||||||||||||
Income tax expense | 8.6 | 5.1 | 68.6 | % | 15.5 | 44.7 | -65.3 | % | ||||||||||||||||||||||||||||||
Net income | $ | 36.5 | $ | 25.4 | 43.7 | % | $ | 85.5 | $ | 151.4 | -43.5 | % |
Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||||||||||||||||
2020 | 2019 | 2020 | 2019 | |||||||||||||||||||||||
Investment yield, excluding limited partnership interests, pretax - annualized* | 4.2% | 4.6% | 4.4% | 4.7% | ||||||||||||||||||||||
Investment yield, excluding limited partnership interests, after tax - annualized* | 3.3% | 3.7% | 3.5% | 3.8% |
Horace Mann Educators Corporation | 32 | Quarterly Report on Form 10-Q |
($ in millions) | Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||||||||||||
2020 | 2019 | 2020 | 2019 | |||||||||||||||||||||||
Net other-than-temporary impairment losses on securities recognized in net income | $ | (1.1) | $ | — | $ | (5.3) | $ | (0.3) | ||||||||||||||||||
Sales and other, net | 3.7 | 0.6 | 8.6 | 147.5 | ||||||||||||||||||||||
Change in fair value - equity securities | 2.3 | 1.1 | (5.6) | 8.0 | ||||||||||||||||||||||
Change in fair value and gains (losses) realized on settlements - derivatives | (2.4) | (3.8) | (10.5) | (3.6) | ||||||||||||||||||||||
Net investment gains (losses) | $ | 2.5 | $ | (2.1) | $ | (12.8) | $ | 151.6 |
Horace Mann Educators Corporation | 33 | Quarterly Report on Form 10-Q |
Horace Mann Educators Corporation | 34 | Quarterly Report on Form 10-Q |
Horace Mann Educators Corporation | 35 | Quarterly Report on Form 10-Q |
Horace Mann Educators Corporation | 36 | Quarterly Report on Form 10-Q |
($ in millions) | Three Months Ended September 30, | Change From Prior Year | Nine Months Ended September 30, | Change From Prior Year | ||||||||||||||||||||||||||
2017 | 2016 | Percent | Amount | 2017 | 2016 | Percent | Amount | |||||||||||||||||||||||
Insurance premiums written and contract deposits (includes annuity and life contract deposits) | ||||||||||||||||||||||||||||||
Property and Casualty | $ | 177.2 | $ | 169.8 | 4.4 | % | $ | 7.4 | $ | 498.0 | $ | 476.3 | 4.6 | % | $ | 21.7 | ||||||||||||||
Retirement (annuity) | 114.8 | 154.6 | -25.7 | % | (39.8 | ) | 348.9 | 391.9 | -11.0 | % | (43.0 | ) | ||||||||||||||||||
Life | 26.4 | 27.2 | -2.9 | % | (0.8 | ) | 79.8 | 78.4 | 1.8 | % | 1.4 | |||||||||||||||||||
Total | $ | 318.4 | $ | 351.6 | -9.4 | % | $ | (33.2 | ) | $ | 926.7 | $ | 946.6 | (2.1 | )% | $ | (19.9 | ) | ||||||||||||
Insurance premiums and contract charges earned (excludes annuity and life contract deposits) | ||||||||||||||||||||||||||||||
Property and Casualty | $ | 163.2 | $ | 155.7 | 4.8 | % | $ | 7.5 | $ | 482.0 | $ | 461.5 | 4.4 | % | $ | 20.5 | ||||||||||||||
Retirement (annuity) | 7.5 | 6.4 | 17.2 | % | 1.1 | 20.8 | 18.6 | 11.8 | % | 2.2 | ||||||||||||||||||||
Life | 28.3 | 29.0 | -2.4 | % | (0.7 | ) | 87.6 | 84.8 | 3.3 | % | 2.8 | |||||||||||||||||||
Total | $ | 199.0 | $ | 191.1 | 4.1 | % | $ | 7.9 | $ | 590.4 | $ | 564.9 | 4.5 | % | $ | 25.5 |
September 30, 2017 | December 31, 2016 | September 30, 2016 | ||||
Property and Casualty | ||||||
Automobile | 482,035 | 484,915 | 486,229 | |||
Property | 217,377 | 220,137 | 221,094 | |||
Total | 699,412 | 705,052 | 707,323 | |||
Retirement | 221,309 | 219,105 | 215,445 | |||
Life | 196,978 | 197,937 | 197,792 |
Horace Mann Educators Corporation | 37 | Quarterly Report on Form 10-Q |
($ in millions, unless otherwise indicated) | Three Months Ended September 30, | 2020-2019 | Nine Months Ended September 30, | 2020-2019 | ||||||||||||||||||||||||||||||||||
2020 | 2019 | Change | 2020 | 2019 | Change | |||||||||||||||||||||||||||||||||
Financial Data: | ||||||||||||||||||||||||||||||||||||||
Written premiums*: | ||||||||||||||||||||||||||||||||||||||
Automobile | $ | 109.5 | $ | 118.8 | -7.8 | % | $ | 315.6 | $ | 350.2 | -9.9 | % | ||||||||||||||||||||||||||
Property and other | 63.3 | 63.7 | -0.6 | % | 166.9 | 168.3 | -0.8 | % | ||||||||||||||||||||||||||||||
Total premiums written | 172.8 | 182.5 | -5.3 | % | 482.5 | 518.5 | -6.9 | % | ||||||||||||||||||||||||||||||
Change in unearned insurance premiums | (6.8) | (12.0) | 43.3 | % | 6.2 | (5.9) | N.M. | |||||||||||||||||||||||||||||||
Total insurance premiums earned | 166.0 | 170.5 | -2.6 | % | 488.7 | 512.6 | -4.7 | % | ||||||||||||||||||||||||||||||
Incurred claims and claims expenses: | ||||||||||||||||||||||||||||||||||||||
Claims occurring in the current year | 125.6 | 122.5 | 2.5 | % | 340.2 | 375.7 | -9.4 | % | ||||||||||||||||||||||||||||||
Prior years' reserve development | 7.2 | 3.5 | 105.7 | % | 9.2 | 7.5 | 22.7 | % | ||||||||||||||||||||||||||||||
Total claims and claim expenses incurred | 118.4 | 119.0 | -0.5 | % | 331.0 | 368.2 | -10.1 | % | ||||||||||||||||||||||||||||||
Operating expenses, including DAC amortization | 41.9 | 45.0 | -6.9 | % | 126.0 | 136.9 | -8.0 | % | ||||||||||||||||||||||||||||||
Underwriting gain | 5.7 | 6.5 | -12.3 | % | 31.7 | 7.5 | N.M. | |||||||||||||||||||||||||||||||
Net investment income | 13.7 | 10.7 | 28.0 | % | 30.3 | 33.6 | -9.8 | % | ||||||||||||||||||||||||||||||
Income before income taxes | 19.8 | 17.4 | 13.8 | % | 63.7 | 41.8 | 52.4 | % | ||||||||||||||||||||||||||||||
Net income/core earnings* | 15.8 | 14.2 | 11.3 | % | 53.7 | 34.3 | 56.6 | % | ||||||||||||||||||||||||||||||
Operating Statistics: | ||||||||||||||||||||||||||||||||||||||
Automobile | ||||||||||||||||||||||||||||||||||||||
Loss and loss adjustment expense ratio | 57.6 | % | 65.8 | % | -8.2 | pts | 59.1 | % | 70.2 | % | -11.1 | pts | ||||||||||||||||||||||||||
Expense ratio | 25.7 | % | 26.6 | % | -0.9 | pts | 26.2 | % | 26.8 | % | -0.6 | pts | ||||||||||||||||||||||||||
Combined ratio: | 83.3 | % | 92.4 | % | -9.1 | pts | 85.3 | % | 97.0 | % | -11.7 | pts | ||||||||||||||||||||||||||
Prior years' reserve development | -0.9 | % | -3.0 | % | 2.1 | pts | -0.6 | % | -1.6 | % | 1.0 | pts | ||||||||||||||||||||||||||
Catastrophe losses | 1.7 | % | 2.1 | % | -0.4 | pts | 1.6 | % | 1.6 | % | — | pts | ||||||||||||||||||||||||||
Underlying combined ratio* | 82.5 | % | 93.3 | % | -10.8 | pts | 84.3 | % | 97.0 | % | -12.7 | pts | ||||||||||||||||||||||||||
Property | ||||||||||||||||||||||||||||||||||||||
Loss and loss adjustment expense ratio | 97.3 | % | 78.2 | % | 19.1 | pts | 84.5 | % | 75.3 | % | 9.2 | pts | ||||||||||||||||||||||||||
Expense ratio | 24.4 | % | 26.1 | % | -1.7 | pts | 25.1 | % | 26.7 | % | -1.6 | pts | ||||||||||||||||||||||||||
Combined ratio: | 121.7 | % | 104.3 | % | 17.4 | pts | 109.6 | % | 102.0 | % | 7.6 | pts | ||||||||||||||||||||||||||
Prior years' reserve development | -10.8 | % | — | % | -10.8 | pts | -4.3 | % | -1.2 | % | -3.1 | pts | ||||||||||||||||||||||||||
Catastrophe losses | 57.3 | % | 22.6 | % | 34.7 | pts | 43.9 | % | 25.9 | % | 18.0 | pts | ||||||||||||||||||||||||||
Underlying combined ratio* | 75.2 | % | 81.7 | % | -6.5 | pts | 70.0 | % | 77.3 | % | -7.3 | pts | ||||||||||||||||||||||||||
Risks in force (in thousands) | ||||||||||||||||||||||||||||||||||||||
Automobile (1) | 406 | 441 | -7.9 | % | ||||||||||||||||||||||||||||||||||
Property | 187 | 196 | -4.6 | % | ||||||||||||||||||||||||||||||||||
Total | 593 | 637 | -6.9 | % |
Horace Mann Educators Corporation | 38 | Quarterly Report on Form 10-Q |
Horace Mann Educators Corporation | 39 | Quarterly Report on Form 10-Q |
($ in millions, unless otherwise indicated) | Three Months Ended September 30, | 2020-2019 | Nine Months Ended September 30, | 2020-2019 | ||||||||||||||||||||||||||||||||||
2020 | 2019 | Change | 2020 | 2019 | Change | |||||||||||||||||||||||||||||||||
Financial Data: | ||||||||||||||||||||||||||||||||||||||
Insurance premiums and contract deposits* | $ | 32.0 | $ | 32.7 | -2.1 | % | $ | 98.3 | $ | 32.7 | N/A | |||||||||||||||||||||||||||
Insurance premiums and contract charges earned | 32.5 | 32.9 | -1.2 | % | 98.8 | 32.9 | N/A | |||||||||||||||||||||||||||||||
Net investment income | 4.3 | 3.7 | 16.2 | % | 11.8 | 3.7 | N/A | |||||||||||||||||||||||||||||||
Benefits and settlement expenses | 10.5 | 14.7 | -28.6 | % | 33.5 | 14.7 | N/A | |||||||||||||||||||||||||||||||
Operating expenses (includes DAC unlocking and amortization expense) | 10.1 | 10.5 | -3.8 | % | 30.3 | 10.5 | N/A | |||||||||||||||||||||||||||||||
Intangible asset amortization expense | 3.1 | 3.2 | -3.1 | % | 9.5 | 3.2 | N/A | |||||||||||||||||||||||||||||||
Income before income taxes | 13.6 | 8.8 | 54.5 | % | 39.1 | 8.8 | N/A | |||||||||||||||||||||||||||||||
Net income / core earnings* | 10.6 | 6.9 | 53.6 | % | 30.6 | 6.9 | N/A | |||||||||||||||||||||||||||||||
Operating Statistics: | ||||||||||||||||||||||||||||||||||||||
Supplemental insurance in force (thousands) | 292 | 297 | -1.7 | % | ||||||||||||||||||||||||||||||||||
Benefits ratio (1) | 32.3 | % | 44.7 | % | -12.4 | pts | 33.9 | % | 44.7 | % | N/A | |||||||||||||||||||||||||||
Operating expense ratio (2) | 26.9 | % | 28.2 | % | -1.3 | pts | 26.9 | % | 28.2 | % | N/A | |||||||||||||||||||||||||||
Pretax profit margin (2) | 36.3 | % | 23.7 | % | 12.6 | pts | 34.7 | % | 23.7 | % | N/A | |||||||||||||||||||||||||||
Persistency | 90.1 | % | 88.9 | % | 1.2 | pts |
Horace Mann Educators Corporation | 40 | Quarterly Report on Form 10-Q |
Horace Mann Educators Corporation | 41 | Quarterly Report on Form 10-Q |
($ in millions, unless otherwise indicated) | Three Months Ended September 30, | 2020-2019 | Nine Months Ended September 30, | 2020-2019 | ||||||||||||||||||||||||||||||||||
2020 | 2019 | Change | 2020 | 2019 | Change | |||||||||||||||||||||||||||||||||
Financial Data: | ||||||||||||||||||||||||||||||||||||||
Contract charges earned | $ | 7.4 | $ | 6.6 | 12.1 | % | $ | 21.5 | $ | 22.1 | -2.7 | % | ||||||||||||||||||||||||||
Net investment income | 58.1 | 60.8 | -4.4 | % | 166.7 | 188.2 | -11.4 | % | ||||||||||||||||||||||||||||||
Interest credited | 39.7 | 42.4 | -6.4 | % | 119.4 | 126.4 | -5.5 | % | ||||||||||||||||||||||||||||||
Net interest margin without net investment gains (losses) | 19.4 | 19.5 | -0.5 | % | 50.2 | 64.0 | -21.6 | % | ||||||||||||||||||||||||||||||
Net interest margin - reinsured block | (1.0) | (1.1) | 9.1 | % | (2.9) | (2.2) | -31.8 | % | ||||||||||||||||||||||||||||||
Mortality loss and other reserve charges | 1.3 | 0.9 | 44.4 | % | 4.1 | 2.7 | 51.9 | % | ||||||||||||||||||||||||||||||
Operating expenses | 15.1 | 16.7 | -9.6 | % | 44.0 | 51.0 | -13.7 | % | ||||||||||||||||||||||||||||||
DAC and intangible asset amortization expense, excluding DAC unlocking | 5.1 | 4.9 | 4.1 | % | 15.1 | 15.2 | -0.7 | % | ||||||||||||||||||||||||||||||
DAC unlocking | (0.7) | — | N.M. | (1.3) | 3.6 | -136.1 | % | |||||||||||||||||||||||||||||||
Income (loss) before income taxes | 8.9 | 7.0 | 27.1 | % | 19.0 | (3.2) | N.M. | |||||||||||||||||||||||||||||||
Net income (loss) | 7.8 | 5.9 | 32.2 | % | 16.6 | (6.9) | N.M. | |||||||||||||||||||||||||||||||
Core earnings | 7.8 | 5.9 | 32.2 | % | 16.6 | 21.1 | -21.3 | % | ||||||||||||||||||||||||||||||
Operating Statistics: | ||||||||||||||||||||||||||||||||||||||
Annuity contract deposits* | ||||||||||||||||||||||||||||||||||||||
Variable | $ | 58.5 | $ | 54.6 | 7.1 | % | $ | 168.6 | $ | 157.5 | 7.0 | % | ||||||||||||||||||||||||||
Fixed | 78.7 | 73.7 | 6.8 | % | 198.1 | 187.1 | 5.9 | % | ||||||||||||||||||||||||||||||
Total | 137.2 | 128.3 | 6.9 | % | 366.7 | 344.6 | 6.4 | % | ||||||||||||||||||||||||||||||
Single | 83.9 | 81.3 | 3.2 | % | 201.9 | 193.0 | 4.6 | % | ||||||||||||||||||||||||||||||
Recurring | 53.3 | 47.0 | 13.4 | % | 164.8 | 151.6 | 8.7 | % | ||||||||||||||||||||||||||||||
Total | 137.2 | 128.3 | 6.9 | % | 366.7 | 344.6 | 6.4 | % | ||||||||||||||||||||||||||||||
Assets under administration (AUA) | ||||||||||||||||||||||||||||||||||||||
Annuity assets under management (1) | 4,508.7 | 4,215.9 | 6.9 | % | ||||||||||||||||||||||||||||||||||
Broker and advisory assets under administration | 2,124.3 | 2,259.4 | -6.0 | % | ||||||||||||||||||||||||||||||||||
Recordkeeping assets under administration | 1,399.6 | 1,422.4 | -1.6 | % | ||||||||||||||||||||||||||||||||||
Total | 8,032.6 | 7,897.7 | 1.7 | % | ||||||||||||||||||||||||||||||||||
Persistency | ||||||||||||||||||||||||||||||||||||||
Variable annuities | 94.8 | % | 94.7 | % | 0.1 | pts | ||||||||||||||||||||||||||||||||
Fixed annuities | 94.5 | % | 93.9 | % | 0.6 | pts | ||||||||||||||||||||||||||||||||
Total | 94.6 | % | 94.2 | % | 0.4 | pts | ||||||||||||||||||||||||||||||||
Annuity contracts in force (thousands) | 230 | 227 | 1.3 | % | ||||||||||||||||||||||||||||||||||
Fixed spread - YTD annualized (basis points) | 188 | 198 | -10 | bps |
($ in millions) | September 30, 2017 | ||||||||||||||
Number of Issuers | Fair Value | Amortized Cost or Cost | Pretax Net Unrealized Investment Gain (Loss) | ||||||||||||
Fixed maturity securities | |||||||||||||||
Corporate bonds | |||||||||||||||
Banking & Finance | 119 | $ | 704.4 | $ | 661.9 | $ | 42.5 | ||||||||
Insurance | 56 | 284.5 | 255.4 | 29.1 | |||||||||||
Energy (1) | 58 | 232.7 | 217.8 | 14.9 | |||||||||||
Real Estate | 42 | 184.6 | 175.8 | 8.8 | |||||||||||
Technology | 34 | 180.6 | 172.0 | 8.6 | |||||||||||
HealthCare, Pharmacy | 51 | 163.1 | 152.3 | 10.8 | |||||||||||
Utilities | 42 | 153.8 | 134.5 | 19.3 | |||||||||||
Transportation | 37 | 150.2 | 142.8 | 7.4 | |||||||||||
Telecommunications | 26 | 110.9 | 102.6 | 8.3 | |||||||||||
Food and Beverage | 23 | 91.1 | 87.2 | 3.9 | |||||||||||
All other corporates (2) | 215 | 565.8 | 533.0 | 32.8 | |||||||||||
Total corporate bonds | 703 | 2,821.7 | 2,635.3 | 186.4 | |||||||||||
Mortgage-backed securities | |||||||||||||||
U.S. Government and federally sponsored agencies | 229 | 420.4 | 391.4 | 29.0 | |||||||||||
Commercial (3) | 125 | 535.1 | 531.4 | 3.7 | |||||||||||
Other | 28 | 70.1 | 69.0 | 1.1 | |||||||||||
Municipal bonds (4) | 378 | 1,842.2 | 1,669.3 | 172.9 | |||||||||||
Government bonds | |||||||||||||||
U.S. | 38 | 671.0 | 653.2 | 17.8 | |||||||||||
Foreign | 15 | 100.2 | 93.8 | 6.4 | |||||||||||
Collateralized debt obligations (5) | 87 | 522.4 | 517.4 | 5.0 | |||||||||||
Asset-backed securities | 101 | 647.5 | 633.6 | 13.9 | |||||||||||
Total fixed maturity securities | 1,704 | $ | 7,630.6 | $ | 7,194.4 | $ | 436.2 | ||||||||
Equity securities | |||||||||||||||
Non-redeemable preferred stocks | 14 | $ | 64.0 | $ | 61.5 | $ | 2.5 | ||||||||
Common stocks | 198 | 74.7 | 58.7 | 16.0 | |||||||||||
Closed-end fund | 1 | 20.6 | 20.0 | 0.6 | |||||||||||
Total equity securities | 213 | $ | 159.3 | $ | 140.2 | $ | 19.1 | ||||||||
Total | 1,917 | $ | 7,789.9 | $ | 7,334.6 | $ | 455.3 |
($ in millions) | Percent of Portfolio | |||||||||||||
Fair Value | September 30, 2017 | |||||||||||||
December 31, 2016 | September 30, 2017 | Fair Value | Amortized Cost or Cost | |||||||||||
Fixed maturity securities | ||||||||||||||
AAA | 8.3 | % | 7.4 | % | $ | 563.1 | $ | 544.6 | ||||||
AA (2) | 35.5 | 37.3 | 2,843.3 | 2,690.2 | ||||||||||
A | 23.6 | 24.2 | 1,845.0 | 1,714.8 | ||||||||||
BBB | 28.4 | 27.1 | 2,071.9 | 1,951.0 | ||||||||||
BB | 2.4 | 2.4 | 187.0 | 181.5 | ||||||||||
B | 1.0 | 0.8 | 64.3 | 63.1 | ||||||||||
CCC or lower | 0.2 | 0.1 | 4.9 | 4.9 | ||||||||||
Not rated (3) | 0.6 | 0.7 | 51.1 | 44.3 | ||||||||||
Total fixed maturity securities | 100.0 | % | 100.0 | % | $ | 7,630.6 | $ | 7,194.4 | ||||||
Equity securities | ||||||||||||||
AAA | — | — | — | — | ||||||||||
AA | — | — | — | — | ||||||||||
A | — | — | — | — | ||||||||||
BBB | 35.3 | % | 40.2 | % | $ | 64.0 | $ | 61.5 | ||||||
BB | — | — | — | — | ||||||||||
B | — | — | — | — | ||||||||||
CCC or lower | — | — | — | — | ||||||||||
Not rated | 64.7 | 59.8 | 95.3 | 78.7 | ||||||||||
Total equity securities | 100.0 | % | 100.0 | % | $ | 159.3 | $ | 140.2 | ||||||
Total | $ | 7,789.9 | $ | 7,334.6 |
($ in millions) | Three Months Ended September 30, | Change From Prior Year | Nine Months Ended September 30, | Change From Prior Year | ||||||||||||||||||||||||||
2017 | 2016 | Percent | Amount | 2017 | 2016 | Percent | Amount | |||||||||||||||||||||||
Property and Casualty | $ | 114.9 | $ | 116.0 | -0.9 | % | $ | (1.1 | ) | $ | 384.9 | $ | 347.0 | 10.9 | % | $ | 37.9 | |||||||||||||
Retirement | 1.6 | 1.4 | 14.3 | % | 0.2 | 4.0 | 3.1 | 29.0 | % | 0.9 | ||||||||||||||||||||
Life | 18.4 | 18.3 | 0.5 | % | 0.1 | 56.0 | 53.5 | 4.7 | % | 2.5 | ||||||||||||||||||||
Total | $ | 134.9 | $ | 135.7 | -0.6 | % | $ | (0.8 | ) | $ | 444.9 | $ | 403.6 | 10.2 | % | $ | 41.3 | |||||||||||||
Property and Casualty catastrophe losses, included above | $ | 8.6 | $ | 8.4 | 2.4 | % | $ | 0.2 | $ | 58.2 | $ | 48.4 | 20.2 | % | $ | 9.8 |
($ in millions) | Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||
2017 | 2016 | 2017 | 2016 | |||||||||||||
Incurred claims and claim expenses: | ||||||||||||||||
Claims occurring in the current year | $ | 115.4 | $ | 116.7 | $ | 387.0 | $ | 351.3 | ||||||||
Decrease in estimated reserves for claims occurring in prior years (2) | (0.5 | ) | (0.7 | ) | (2.1 | ) | (4.3 | ) | ||||||||
Total claims and claim expenses incurred | $ | 114.9 | $ | 116.0 | $ | 384.9 | $ | 347.0 | ||||||||
Property and Casualty loss ratio: | ||||||||||||||||
Total | 70.4 | % | 74.5 | % | 79.8 | % | 75.2 | % | ||||||||
Effect of catastrophe costs, included above (1) | 5.3 | % | 5.3 | % | 12.0 | % | 10.5 | % | ||||||||
Effect of prior years’ reserve development, included above (2) | -0.3 | % | -0.4 | % | -0.4 | % | -0.9 | % |
(1) Property and Casualty catastrophe losses were incurred as follows: | ||||||||
2017 | 2016 | |||||||
Three months ended | ||||||||
March 31 | $ | 17.2 | $ | 12.7 | ||||
June 30 | 32.4 | 27.3 | ||||||
September 30 | 8.6 | 8.4 | ||||||
Total year-to-date | $ | 58.2 | $ | 48.4 | ||||
(2) Shows the amounts by which the Company decreased its reserves in each of the periods indicated for claims occurring in previous years to reflect subsequent information on such claims and changes in their projected final settlement costs. | ||||||||
2017 | 2016 | |||||||
Three months ended | ||||||||
March 31 | $ | (1.0 | ) | $ | (2.0 | ) | ||
June 30 | (0.6 | ) | (1.6 | ) | ||||
September 30 | (0.5 | ) | (0.7 | ) | ||||
Total year-to-date | $ | (2.1 | ) | $ | (4.3 | ) |
($ in millions) | Three Months Ended September 30, | Change From Prior Year | Nine Months Ended September 30, | Change From Prior Year | ||||||||||||||||||||||||||
2017 | 2016 | Percent | Amount | 2017 | 2016 | Percent | Amount | |||||||||||||||||||||||
Retirement (annuity) | $ | 38.8 | $ | 37.4 | 3.7 | % | $ | 1.4 | $ | 114.4 | $ | 109.4 | 4.6 | % | $ | 5.0 | ||||||||||||||
Life | 11.3 | 11.2 | 0.9 | % | 0.1 | 33.8 | 33.5 | 0.9 | % | 0.3 | ||||||||||||||||||||
Total | $ | 50.1 | $ | 48.6 | 3.1 | % | $ | 1.5 | $ | 148.2 | $ | 142.9 | 3.7 | % | $ | 5.3 |
Horace Mann Educators Corporation | 42 | Quarterly Report on Form 10-Q |
($ in millions) | September 30, 2020 | |||||||||||||||||||||||||||||||
Deferred Annuities at | ||||||||||||||||||||||||||||||||
Total Deferred Annuities | Minimum Guaranteed Rate | |||||||||||||||||||||||||||||||
Percent of Total | Accumulated Value (AV) | Percent of Total Deferred Annuities AV | Percent of Total | Accumulated Value | ||||||||||||||||||||||||||||
Minimum guaranteed interest rates: | ||||||||||||||||||||||||||||||||
Less than 2% | 54.2 | % | $ | 1,334.2 | 51.6 | % | 38.9 | % | $ | 688.5 | ||||||||||||||||||||||
Equal to 2% but less than 3% | 11.7 | % | 287.5 | 83.3 | % | 13.5 | % | 239.6 | ||||||||||||||||||||||||
Equal to 3% but less than 4% | 25.1 | % | 619.0 | 99.9 | % | 35.0 | % | 618.5 | ||||||||||||||||||||||||
Equal to 4% but less than 5% | 6.9 | % | 170.9 | 100.0 | % | 9.7 | % | 170.9 | ||||||||||||||||||||||||
5% or higher | 2.1 | % | 50.6 | 100.0 | % | 2.9 | % | 50.6 | ||||||||||||||||||||||||
Total | 100.0 | % | $ | 2,462.2 | 71.8 | % | 100.0 | % | $ | 1,768.1 |
($ in millions) | September 30, 2017 | ||||||||||||||||
Deferred Annuities at | |||||||||||||||||
Total Deferred Annuities | Minimum Guaranteed Rate | ||||||||||||||||
Percent of Total | Accumulated Value (“AV”) | Percent of Total Deferred Annuities AV | Percent of Total | Accumulated Value | |||||||||||||
Minimum guaranteed interest rates: | |||||||||||||||||
Less than 2% | 24.9 | % | $ | 1,083.8 | 51.3 | % | 14.7 | % | $ | 556.5 | |||||||
Equal to 2% but less than 3% | 7.1 | 307.4 | 83.0 | % | 6.8 | 255.1 | |||||||||||
Equal to 3% but less than 4% | 14.1 | 614.0 | 99.9 | % | 16.3 | 613.4 | |||||||||||
Equal to 4% but less than 5% | 52.6 | 2,288.7 | 100.0 | % | 60.7 | 2,288.7 | |||||||||||
5% or higher | 1.3 | 55.4 | 100.0 | % | 1.5 | 55.4 | |||||||||||
Total | 100.0 | % | $ | 4,349.3 | 86.7 | % | 100.0 | % | $ | 3,769.1 |
Horace Mann Educators Corporation | 43 | Quarterly Report on Form 10-Q |
($ in millions, unless otherwise indicated) | Three Months Ended September 30, | 2020-2019 | Nine Months Ended September 30, | 2020-2019 | ||||||||||||||||||||||||||||||||||
2020 | 2019 | Change | 2020 | 2019 | Change | |||||||||||||||||||||||||||||||||
Financial Data: | ||||||||||||||||||||||||||||||||||||||
Insurance premiums and contract deposits* | $ | 26.9 | $ | 27.7 | -2.9 | % | $ | 79.3 | $ | 82.5 | -3.9 | % | ||||||||||||||||||||||||||
Insurance premiums and contract charges earned | 29.4 | 29.7 | -1.0 | % | 88.0 | 90.0 | -2.2 | % | ||||||||||||||||||||||||||||||
Net investment income | 18.2 | 18.4 | -1.1 | % | 49.4 | 54.8 | -9.9 | % | ||||||||||||||||||||||||||||||
Benefits and settlement expenses | 21.2 | 19.6 | 8.2 | % | 64.5 | 60.7 | 6.3 | % | ||||||||||||||||||||||||||||||
Interest credited | 11.2 | 11.2 | — | % | 33.7 | 33.7 | — | % | ||||||||||||||||||||||||||||||
Operating expenses | 8.4 | 8.9 | -5.6 | % | 25.8 | 27.5 | -6.2 | % | ||||||||||||||||||||||||||||||
DAC amortization expense, excluding unlocking | 1.9 | 2.0 | -5.0 | % | 5.8 | 6.1 | -4.9 | % | ||||||||||||||||||||||||||||||
DAC unlocking | (0.2) | — | N.M. | (0.5) | (0.1) | N.M. | ||||||||||||||||||||||||||||||||
Income before income taxes | 5.2 | 6.4 | -18.8 | % | 8.2 | 17.1 | -52.0 | % | ||||||||||||||||||||||||||||||
Net income / core earnings* | 4.3 | 5.1 | -15.7 | % | 6.8 | 13.6 | -50.0 | % | ||||||||||||||||||||||||||||||
Operating Statistics: | ||||||||||||||||||||||||||||||||||||||
Life insurance in force | $ | 19,681 | $ | 18,937 | 3.9 | % | ||||||||||||||||||||||||||||||||
Number of policies in force (thousands) | 201 | 202 | -0.5 | % | ||||||||||||||||||||||||||||||||||
Average face amount in force (in dollars) | $ | 97,712 | $ | 93,944 | 4.0 | % | ||||||||||||||||||||||||||||||||
Lapse ratio (ordinary life insurance in force) | 4.3 | % | 4.5 | % | -0.2pts | |||||||||||||||||||||||||||||||||
Mortality costs | $ | 28.3 | $ | 26.4 | 7.2 | % |
Horace Mann Educators Corporation | 44 | Quarterly Report on Form 10-Q |
($ in millions) | Three Months Ended September 30, | 2020-2019 | Nine Months Ended September 30, | 2020-2019 | ||||||||||||||||||||||||||||||||||
2020 | 2019 | Change % | 2020 | 2019 | Change % | |||||||||||||||||||||||||||||||||
Interest expense | $ | 3.4 | $ | 4.3 | -20.9 | % | $ | 11.3 | $ | 10.2 | 10.8 | % | ||||||||||||||||||||||||||
Net investment gains (losses) pretax | 2.5 | (2.1) | N.M. | (12.8) | 151.6 | N.M. | ||||||||||||||||||||||||||||||||
Tax on net investment gains (losses) | 0.6 | (0.5) | N.M. | (2.7) | 32.7 | N.M. | ||||||||||||||||||||||||||||||||
Net investment gains (losses) after tax | 1.9 | (1.6) | N.M. | (10.1) | 118.9 | N.M. | ||||||||||||||||||||||||||||||||
Net income (loss) | (2.0) | (6.7) | 70.1 | % | (22.2) | 103.5 | -121.4 | % | ||||||||||||||||||||||||||||||
Core earnings (loss)* | (3.9) | (5.1) | 23.5 | % | (12.1) | (15.4) | 21.4 | % |
($ in millions) | Three Months Ended September 30, | 2020-2019 | Nine Months Ended September 30, | 2020-2019 | ||||||||||||||||||||||||||||||||||
2020 | 2019 | Change % | 2020 | 2019 | Change % | |||||||||||||||||||||||||||||||||
Net investment income - Investment portfolio | $ | 69.2 | $ | 69.2 | — | % | $ | 184.3 | $ | 232.3 | -20.7 | % | ||||||||||||||||||||||||||
Investment income - Deposit asset on reinsurance | 24.5 | 23.8 | 2.9 | % | 72.1 | 47.0 | 53.4 | % | ||||||||||||||||||||||||||||||
Total net investment income | 93.7 | 93.0 | 0.8 | % | 256.4 | 279.3 | -8.2 | % | ||||||||||||||||||||||||||||||
Pretax net investment gains (losses) | 2.5 | (2.1) | 219.0 | % | (12.8) | 151.6 | -108.4 | % | ||||||||||||||||||||||||||||||
Pretax net unrealized investment gains on fixed maturity securities | 496.2 | 386.1 | 28.5 | % |
Horace Mann Educators Corporation | 45 | Quarterly Report on Form 10-Q |
($ in millions) | September 30, 2020 | |||||||||||||||||||||||||
Number of Issuers | Fair Value | Amortized Cost or Cost | Pretax Net Unrealized Gain (Loss) | |||||||||||||||||||||||
Fixed maturity securities | ||||||||||||||||||||||||||
Corporate bonds | ||||||||||||||||||||||||||
Banking & Finance | 146 | $ | 483.9 | $ | 439.1 | $ | 44.8 | |||||||||||||||||||
Insurance | 50 | 199.4 | 176.6 | 22.8 | ||||||||||||||||||||||
Energy (1) | 75 | 156.8 | 143.7 | 13.1 | ||||||||||||||||||||||
HealthCare,Pharmacy | 76 | 147.7 | 134.0 | 13.7 | ||||||||||||||||||||||
Real Estate | 35 | 120.5 | 112.8 | 7.7 | ||||||||||||||||||||||
Transportation | 45 | 98.9 | 92.9 | 6.0 | ||||||||||||||||||||||
Technology | 40 | 89.8 | 82.3 | 7.5 | ||||||||||||||||||||||
Utilities | 57 | 87.5 | 75.0 | 12.5 | ||||||||||||||||||||||
Food and Beverage | 30 | 72.4 | 61.3 | 11.1 | ||||||||||||||||||||||
Broadcasting & Media | 26 | 61.6 | 52.0 | 9.6 | ||||||||||||||||||||||
All other corporates (2) | 324 | 465.0 | 432.7 | 32.3 | ||||||||||||||||||||||
Total corporate bonds | 904 | 1,983.5 | 1,802.4 | 181.1 | ||||||||||||||||||||||
Mortgage-backed securities | ||||||||||||||||||||||||||
U.S. Government and federally sponsored agencies | 268 | 485.7 | 431.6 | 54.1 | ||||||||||||||||||||||
Commercial (3) | 126 | 351.8 | 317.5 | 34.3 | ||||||||||||||||||||||
Other | 41 | 59.5 | 59.6 | (0.1) | ||||||||||||||||||||||
Municipal bonds (4) | 589 | 1,816.5 | 1,621.3 | 195.2 | ||||||||||||||||||||||
Government bonds | ||||||||||||||||||||||||||
U.S. | 36 | 384.1 | 341.7 | 42.4 | ||||||||||||||||||||||
Foreign | 7 | 44.8 | 40.2 | 4.6 | ||||||||||||||||||||||
Collateralized loan obligations (5) | 141 | 663.2 | 671.7 | (8.5) | ||||||||||||||||||||||
Asset-backed securities | 112 | 379.4 | 386.3 | (6.9) | ||||||||||||||||||||||
Total fixed maturity securities | 2,224 | $ | 6,168.5 | $ | 5,672.3 | $ | 496.2 | |||||||||||||||||||
Equity securities | ||||||||||||||||||||||||||
Non-redeemable preferred stocks | 17 | $ | 74.1 | |||||||||||||||||||||||
Common stocks | 95 | 6.9 | ||||||||||||||||||||||||
Closed-end fund | 1 | 21.3 | ||||||||||||||||||||||||
Total equity securities | 113 | $ | 102.3 | |||||||||||||||||||||||
Total | 2,337 | $ | 6,270.8 |
Horace Mann Educators Corporation | 46 | Quarterly Report on Form 10-Q |
($ in millions) | September 30, 2020 | |||||||||||||||||||||||||||||||
Number of Issuers | Fair Value | Amortized Cost or Cost | Pretax Net Unrealized Investment Gains (Losses) | Credit Quality | ||||||||||||||||||||||||||||
Fixed maturity securities (1) | ||||||||||||||||||||||||||||||||
Travel and leisure | 58 | $ | 121.7 | $ | 120.3 | $ | 1.4 | BBB | ||||||||||||||||||||||||
Energy-related | 88 | 157.5 | 141.1 | 16.4 | BBB+ | |||||||||||||||||||||||||||
Retail | 27 | 67.4 | 63.3 | 4.1 | A | |||||||||||||||||||||||||||
Aircraft | 61 | 157.6 | 178.1 | (20.5) | BBB+ | |||||||||||||||||||||||||||
Total fixed maturity securities | 234 | $ | 504.2 | $ | 502.8 | $ | 1.4 | BBB+ |
($ in millions) | Three Months Ended September 30, | Change From Prior Year | Nine Months Ended September 30, | Change From Prior Year | ||||||||||||||||||||||||||
2017 | 2016 | Percent | Amount | 2017 | 2016 | Percent | Amount | |||||||||||||||||||||||
Analysis of net income (loss) by segment: | ||||||||||||||||||||||||||||||
Property and Casualty | $ | 13.4 | $ | 6.7 | 100.0 | % | $ | 6.7 | $ | 2.2 | $ | 16.0 | -86.3 | % | $ | (13.8 | ) | |||||||||||||
Retirement | 13.6 | 15.7 | -13.4 | % | (2.1 | ) | 36.9 | 39.3 | -6.1 | % | (2.4 | ) | ||||||||||||||||||
Life | 4.8 | 4.6 | 4.3 | % | 0.2 | 14.3 | 13.1 | 9.2 | % | 1.2 | ||||||||||||||||||||
Corporate and Other (1) | (5.3 | ) | (0.1 | ) | N.M. | (5.2 | ) | (9.3 | ) | (4.5 | ) | 106.7 | % | (4.8 | ) | |||||||||||||||
Net income | $ | 26.5 | $ | 26.9 | -1.5 | % | $ | (0.4 | ) | $ | 44.1 | $ | 63.9 | -31.0 | % | $ | (19.8 | ) | ||||||||||||
Effect of catastrophe costs, after tax, included above | $ | (5.6 | ) | $ | (5.5 | ) | 1.8 | % | $ | (0.1 | ) | $ | (37.8 | ) | $ | (31.5 | ) | 20.0 | % | $ | (6.3 | ) | ||||||||
Effect of net realized investment gains (losses), after tax, included above | $ | (2.2 | ) | $ | 2.7 | N.M. | $ | (4.9 | ) | $ | (0.8 | ) | $ | 3.8 | -121.1 | % | $ | (4.6 | ) | |||||||||||
Diluted: | ||||||||||||||||||||||||||||||
Net income per share | $ | 0.64 | $ | 0.65 | -1.5 | % | $ | (0.01 | ) | $ | 1.06 | $ | 1.55 | -31.6 | % | $ | (0.49 | ) | ||||||||||||
Weighted average number of common and common equivalent shares (in millions) | 41.6 | 41.3 | 0.7 | % | 0.3 | 41.5 | 41.4 | 0.2 | % | 0.1 | ||||||||||||||||||||
Property and casualty combined ratio: | ||||||||||||||||||||||||||||||
Total | 95.8 | % | 101.5 | % | - | -5.7 pts | 106.5 | % | 102.4 | % | - | 4.1 pts | ||||||||||||||||||
Effect of catastrophe costs, included above | 5.3 | % | 5.3 | % | - | 0 pts | 12.0 | % | 10.5 | % | - | 1.5 pts | ||||||||||||||||||
Effect of prior years’ reserve development, included above | -0.3 | % | -0.4 | % | - | 0.1 pts | -0.4 | % | -0.9 | % | - | 0.5 pts |
Quarterly Report on |
($ in millions) | Percent of Portfolio | |||||||||||||||||||||||||
Fair Value | September 30, 2020 | |||||||||||||||||||||||||
December 31, 2019 | September 30, 2020 | Fair Value | Amortized Cost | |||||||||||||||||||||||
Fixed maturity securities | ||||||||||||||||||||||||||
AAA | 11.5 | % | 11.6 | % | $ | 718.7 | $ | 694.1 | ||||||||||||||||||
AA (2) | 42.7 | 40.2 | 2,477.5 | 2,224.4 | ||||||||||||||||||||||
A | 23.3 | 19.9 | 1,227.7 | 1,117.4 | ||||||||||||||||||||||
BBB | 18.9 | 20.4 | 1,256.0 | 1,160.3 | ||||||||||||||||||||||
BB | 1.7 | 2.7 | 170.2 | 167.0 | ||||||||||||||||||||||
B | 0.4 | 0.9 | 54.4 | 54.4 | ||||||||||||||||||||||
CCC or lower | — | 0.1 | 4.2 | 4.9 | ||||||||||||||||||||||
Not rated (3) | 1.5 | 4.2 | 259.8 | 249.8 | ||||||||||||||||||||||
Total fixed maturity securities | 100.0 | % | 100.0 | % | $ | 6,168.5 | $ | 5,672.3 | ||||||||||||||||||
Equity securities | ||||||||||||||||||||||||||
AAA | — | % | — | % | $ | — | ||||||||||||||||||||
AA | — | — | — | |||||||||||||||||||||||
A | — | — | — | |||||||||||||||||||||||
BBB | 59.3 | 69.6 | 71.2 | |||||||||||||||||||||||
BB | — | 2.8 | 2.9 | |||||||||||||||||||||||
B | — | — | — | |||||||||||||||||||||||
CCC or lower | — | — | — | |||||||||||||||||||||||
Not rated | 40.7 | 27.6 | 28.2 | |||||||||||||||||||||||
Total equity securities | 100.0 | % | 100.0 | % | $ | 102.3 | ||||||||||||||||||||
Total | $ | 6,270.8 |
Horace Mann Educators Corporation | 48 | Quarterly Report on Form 10-Q |
($ in millions) | Nine Months Ended September 30, | 2020-2019 | ||||||||||||||||||
2020 | 2019 | Change % | ||||||||||||||||||
Net cash provided by operating activities | $ | 267.8 | $ | 207.2 | 29.2 | % | ||||||||||||||
Net cash used in investing activities | (368.8) | (65.6) | N.M. | |||||||||||||||||
Net cash provided by (used in) financing activities | 141.0 | (114.2) | N.M. | |||||||||||||||||
Net increase in cash | 40.0 | 27.4 | 46.0 | % | ||||||||||||||||
Cash at beginning of period | 25.5 | 11.9 | 114.3 | % | ||||||||||||||||
Cash at end of period | $ | 65.5 | $ | 39.3 | 66.7 | % |
Horace Mann Educators Corporation | 49 | Quarterly Report on Form 10-Q |
Horace Mann Educators Corporation | 50 | Quarterly Report on Form 10-Q |
($ in millions) | Effective Interest Rates | Final Maturity | ||||||||||||||||||||||||
September 30, 2020 | December 31, 2019 | |||||||||||||||||||||||||
Short-term debt | ||||||||||||||||||||||||||
Bank Credit Facility | Variable | 2024 | $ | 135.0 | $ | 135.0 | ||||||||||||||||||||
Long-term debt (1) | ||||||||||||||||||||||||||
4.50% Senior Notes, Aggregate principal amount of $250,000 less unaccrued discount of $378 and $426 and unamortized debt issuance costs of $1,375 and $1,549 | 4.50% | 2025 | 248.2 | 248.0 | ||||||||||||||||||||||
Federal Home Loan Bank borrowing | 0.48% | 2022 | 54.0 | 50.0 | ||||||||||||||||||||||
Total | $ | 437.2 | $ | 433.0 |
Horace Mann Educators Corporation | 51 | Quarterly Report on Form 10-Q |
Insurance Financial | Affirmed/ | |||||||||||||||||||||||||||||||
Strength Ratings (Outlook) | Debt Ratings (Outlook) | Reviewed | ||||||||||||||||||||||||||||||
A.M. Best | 7/2/2020 | |||||||||||||||||||||||||||||||
HMEC (parent company) | N.A. | bbb | (stable) | |||||||||||||||||||||||||||||
HMEC's Life | A | (stable) | N.A. | |||||||||||||||||||||||||||||
HMEC's Property and Casualty subsidiaries | A | (stable) | N.A. | |||||||||||||||||||||||||||||
HMEC's Supplemental subsidiaries | A- | (stable) | N.A. | |||||||||||||||||||||||||||||
Fitch | A | (stable) | BBB | (stable) | 9/22/2020 | |||||||||||||||||||||||||||
Moody's | A2 | (stable) | Baa2 | (stable) | 10/8/2020 | |||||||||||||||||||||||||||
S&P | A | (stable) | BBB | (stable) | 2/19/2020 |
Horace Mann Educators Corporation | 52 | Quarterly Report on Form 10-Q |
Horace Mann Educators Corporation | 54 | Quarterly Report on Form 10-Q |
Period | Total Number of Shares Purchased | Average Price Paid Per Share | Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs | Maximum Number (or Approximate Dollar Value) of Shares That May Yet Be Purchased Under The Plans or Programs | ||||||||
July 1 - 31 | — | — | — | $29.5 million | ||||||||
August 1 - 31 | — | — | — | $29.5 million | ||||||||
September 1 - 30 | 48,440 | $ | 34.26 | 48,440 | $27.8 million | |||||||
Total | 48,440 | $ | 34.26 | 48,440 | $27.8 million |
Exhibit | ||||||||
No. | Description | |||||||
(3) Articles of incorporation and bylaws: | ||||||||
3.1 | ||||||||
3.2 | ||||||||
(4) Instruments defining the rights of security holders, including indentures: | ||||||||
4.1 | ||||||||
4.1(a) | ||||||||
4.2 | ||||||||
4.3 | ||||||||
(10) Material contracts: | ||||||||
10.1 | ||||||||
55 | Quarterly Report on Form 10-Q |
10.1(a) | ||||||||
10.2* | ||||||||
10.2(a)* | ||||||||
10.2(b)* | ||||||||
10.2(c)* | ||||||||
10.2(d)* | ||||||||
10.2(e)* | ||||||||
10.3* | ||||||||
10.3(a)* | ||||||||
10.3(b)* | ||||||||
10.3(c)* | ||||||||
10.3(d)* | ||||||||
Horace Mann Educators Corporation | 56 | Quarterly Report on Form 10-Q |
10.3(e)* | ||||||||
10.3(f)* | ||||||||
10.3(g)* | ||||||||
10.4* |
10.5* | ||||||||
10.6* | ||||||||
10.7* | ||||||||
10.8* | ||||||||
10.9* | ||||||||
10.10(a)* | ||||||||
10.11* | ||||||||
10.11(a)* | ||||||||
10.11(b)* |
Horace Mann Educators Corporation | 57 | Quarterly Report on Form 10-Q |
10.12 | ||||||||
10.13 | ||||||||
10.14 | ||||||||
(31) Certification pursuant to Section 302 of the Sarbanes-Oxley Act of 2002: | ||||||||
31.1 | ||||||||
31.2 | ||||||||
(32) Certification pursuant to Section 906 of the Sarbanes-Oxley Act of 2002: | ||||||||
32.1 | ||||||||
32.2 | ||||||||
(99) Additional exhibits: | ||||||||
99.1 | ||||||||
(101) Interactive Data File: | ||||||||
101.INS | XBRL Instance Document - the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document | |||||||
101.SCH | XBRL Taxonomy Extension Schema | |||||||
101.CAL | XBRL Taxonomy Extension Calculation Linkbase | |||||||
101.DEF | XBRL Taxonomy Extension Definition Linkbase | |||||||
101.LAB | XBRL Taxonomy Extension Label Linkbase | |||||||
101.PRE | XBRL Taxonomy Extension Presentation Linkbase |
Horace Mann Educators Corporation | 58 | Quarterly Report on Form 10-Q |
HORACE MANN EDUCATORS CORPORATION | |||||||||||
(Registrant) | |||||||||||
Date | November | /s/ Marita Zuraitis | |||||||||
Marita Zuraitis | |||||||||||
President and Chief Executive Officer | |||||||||||
Date | November | /s/ Bret A. Conklin | |||||||||
Bret A. Conklin | |||||||||||
Executive Vice President and | |||||||||||
Chief Financial Officer | |||||||||||
Date | November | /s/ Kimberly A. Johnson | |||||||||
Kimberly A. Johnson | |||||||||||
Senior Vice President, Controller and | |||||||||||
Principal Accounting Officer |
Horace Mann Educators Corporation | 59 | Quarterly Report on Form 10-Q |