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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549

FORM 10-Q

(MARK ONE)
[x]QUARTERLY REPORT PURSUANT TO SECTION 13 or 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 1996
OR
[ ]TRANSITION REPORT PURSUANT TO SECTION 13 or 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from to

Commission file number 1-10890

HORACE MANN EDUCATORS CORPORATION
(Exact name of registrant as specified in its charter)

DELAWARE 37-0911756
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)

1 Horace Mann Plaza, Springfield, Illinois 62715-0001
(Address of principal executive offices) (Zip Code)

Registrant's Telephone Number, Including Area Code: 217-789-2500

Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. Yes __X__ No _____

As of November 1, 1996, 23,525,331 shares of Common Stock, par value $0.001
per share, were outstanding, net of 5,588,098 shares of treasury stock.

Total of sequentially numbered pages 43.

Exhibit index on page number 22.

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HORACE MANN EDUCATORS CORPORATION

FORM 10-Q

FOR THE QUARTER ENDED SEPTEMBER 30, 1996

INDEX

Page
----

PART I - FINANCIAL INFORMATION

Item 1. Financial Statements

Consolidated Balance Sheets as of
September 30, 1996 and December 31, 1995........... 1

Consolidated Statements of Operations for the
Three and Nine Months Ended September 30, 1996
and September 30, 1995............................. 2

Consolidated Statements of Changes in Shareholders'
Equity for the Nine Months Ended September 30, 1996
and September 30, 1995............................. 3

Consolidated Statements of Cash Flows for the
Three and Nine Months Ended September 30, 1996
and September 30, 1995............................. 4

Notes to Consolidated Financial Statements.......... 5

Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations.............. 11

PART II - OTHER INFORMATION........................................ 19

Item 4. Submission of Matters to a Vote of Security Holders

Item 6. Exhibits and Reports on Form 8-K

SIGNATURES......................................................... 21

HORACE MANN EDUCATORS CORPORATION
CONSOLIDATED BALANCE SHEETS
(DOLLARS IN THOUSANDS)

SEPTEMBER 30, DECEMBER 31,
1996 1995
------------- ------------

ASSETS

Investments
Fixed maturities, available for
sale, at market (amortized cost,
1996, $2,595,686; 1995, $2,527,032).............. $2,614,742 $2,643,060
Mortgage loans and real estate.................... 51,443 77,895
Short-term investments............................ 26,768 34,983
Policy loans and other............................ 45,015 42,611
---------- ----------
Total investments............................ 2,737,968 2,798,549
Cash............................................... 12,027 9,518
Accrued investment income.......................... 40,604 43,215
Premiums receivable................................ 64,503 51,144
Value of acquired insurance in force and goodwill.. 121,343 129,843
Other assets....................................... 156,571 142,442
Variable annuity assets............................ 613,269 487,543
---------- ----------

Total assets................................. $3,746,285 $3,662,254
========== ==========

LIABILITIES, REDEEMABLE SECURITIES AND SHAREHOLDERS' EQUITY

Policy liabilities
Annuity contract liabilities...................... $1,282,588 $1,275,117
Interest-sensitive life contract liabilities...... 317,753 289,310
Unpaid claims and claim expenses.................. 368,957 385,064
Future policy benefits............................ 182,407 185,449
Unearned premiums................................. 154,489 141,105
---------- ----------
Total policy liabilities..................... 2,306,194 2,276,045
Other policyholder funds........................... 120,516 119,070
Other liabilities.................................. 105,338 133,855
Short-term debt.................................... 50,000 75,000
Long-term debt..................................... 99,555 100,000
Variable annuity liabilities....................... 613,269 487,543
---------- ----------
Total liabilities............................ 3,294,872 3,191,513
---------- ----------
Warrants, subject to redemption.................... 577 577
---------- ----------
Common stock....................................... 29 29
Additional paid-in capital......................... 327,255 323,920
Net unrealized gains on fixed
maturities and equity securities.................. 12,389 76,151
Retained earnings.................................. 265,465 224,366
Treasury stock, at cost............................ (154,302) (154,302)
---------- ----------
Total shareholders' equity................... 450,836 470,164
---------- ----------
Total liabilities, redeemable
securities and shareholders' equity......... $3,746,285 $3,662,254
========== ==========

See accompanying notes to consolidated financial statements.

HORACE MANN EDUCATORS CORPORATION
CONSOLIDATED STATEMENTS OF OPERATIONS
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)

THREE MONTHS ENDED NINE MONTHS ENDED
SEPTEMBER 30, SEPTEMBER 30,
------------------- -----------------
1996 1995 1996 1995
-------- -------- ------- --------

Insurance premiums written
and contract deposits.................. $191,390 $175,734 $556,821 $518,250
======== ======== ======== ========

Revenues
Insurance premiums and
contract charges earned............... $137,412 $133,043 $408,669 $397,499
Net investment income.................. 49,626 49,548 149,185 148,214
Realized investment gains (losses)..... (134) 1,389 2,611 5,704
-------- -------- -------- --------
Total revenues....................... 186,904 183,980 560,465 551,417
-------- -------- -------- --------

Benefits, losses and expenses
Benefits, claims and
settlement expenses................... 100,369 90,602 296,230 282,632
Interest credited...................... 23,923 23,032 71,225 67,560
Policy acquisition expenses amortized.. 10,792 10,488 32,002 31,698
Operating expenses..................... 25,601 26,617 77,126 77,001
Amortization of intangible assets...... 2,802 2,918 8,501 8,821
Interest expense....................... 2,552 3,582 8,022 8,360
Debt retirement costs.................. - - 1,319 -
Additional rights relating to
share repurchase...................... - - - 1,347
-------- -------- -------- --------
Total benefits, losses and expenses.. 166,039 157,239 494,425 477,419
-------- -------- -------- --------

Income before income taxes.............. 20,865 26,741 66,040 73,998
Income tax expense...................... 4,541 7,584 17,202 21,495
-------- -------- -------- --------

Net income.............................. $ 16,324 $ 19,157 $ 48,838 $ 52,503
======== ======== ======== ========

Earnings per share
Assuming no dilution................... $ 0.69 $ 0.83 $ 2.08 $ 2.05
======== ======== ======== ========

Assuming full dilution................. $ 0.69 $ 0.76 $ 2.08 $ 1.93
======== ======== ======== ========

Weighted average number of shares
and equivalent shares (in thousands)
Assuming no dilution.................. 23,474 23,141 23,449 25,594
Assuming full dilution................ 23,474 26,359 23,449 28,812

See accompanying notes to consolidated financial statements.

HORACE MANN EDUCATORS CORPORATION
CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)

NINE MONTHS ENDED
SEPTEMBER 30,
---------------------
1996 1995
---- ----

Common stock
Beginning balance.......................... $ 29 $ 29
Options exercised, 1996, 136,000 shares;
1995, 18,000 shares...................... - -
--------- ---------
Ending balance............................. 29 29
--------- ---------

Additional paid-in capital
Beginning balance.......................... 323,920 323,517
Options exercised.......................... 3,335 378
--------- ---------
Ending balance............................. 327,255 323,895
--------- ---------

Net unrealized gains (losses) on
fixed maturities and equity securities
Beginning balance........................ 76,151 (70,861)
Increase (decrease) for the period....... (63,762) 110,306
--------- ---------
Ending balance........................... 12,389 39,445
--------- ---------

Retained earnings
Beginning balance.......................... 224,366 159,278
Net income................................. 48,838 52,503
Cash dividends, 1996, $0.33 per share;
1995, $0.27 per share.................... (7,739) (6,733)
--------- ---------
Ending balance............................. 265,465 205,048
--------- ---------

Treasury stock, at cost
Beginning balance.......................... (154,302) -
Purchase of 6,500,000 shares (See note 5).. - (174,870)
Issuance of 911,902 shares (See note 5).... - 20,568
--------- ---------
Ending balance............................. (154,302) (154,302)
--------- ---------

Shareholders' equity at end of period....... $ 450,836 $ 414,115
========= =========

See accompanying notes to consolidated financial statements.

HORACE MANN EDUCATORS CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS
(DOLLARS IN THOUSANDS)

THREE MONTHS ENDED NINE MONTHS ENDED
SEPTEMBER 30, SEPTEMBER 30,
---------------------- --------------------------
1996 1995 1996 1995
---------- ---------- -------------- ----------

Cash flows from operating activities
Premiums collected...................... $ 146,670 $ 132,256 $ 427,886 $ 412,585
Policyholder benefits paid.............. (116,876) (104,244) (335,378) (306,207)
Policy acquisition and other
operating expenses paid................ (39,220) (37,669) (121,105) (117,978)
Federal income taxes recovered (paid)... - 4 (10,651) (15,000)
Investment income collected............. 51,094 53,171 151,796 151,578
Interest expense paid................... (4,226) (2,470) (7,382) (5,921)
Other................................... (4,639) 1,211 (2,437) (1,855)
--------- --------- --------- ---------
Net cash provided
by operating activities.............. 32,803 42,259 102,729 117,202
--------- --------- --------- ---------
Cash flows from investing activities
Fixed maturities
Purchases.............................. (206,079) (241,242) (722,154) (746,858)
Sales.................................. 152,155 177,402 512,435 569,142
Maturities............................. 46,391 57,237 149,764 133,581
Reductions in mortgage loans
and real estate........................ 2,629 7,068 27,482 22,093
Net (increase) decrease in
other investments, principally
short-term investments................. (4,950) (25,297) 5,679 (16,818)
--------- --------- --------- ---------
Net cash provided by (used
in) investing activities............. (9,854) (24,832) (26,794) (38,860)
--------- --------- --------- ---------
Cash flows from financing activities
Dividends paid to shareholders.......... (2,580) (2,105) (7,739) (6,733)
Proceeds from issuance of Senior Notes.. - - 98,530 -
Proceeds from issuance of common stock.. - 20,568 - 20,568
Principal borrowings (payments) on
Bank Credit Facility................... (8,000) (38,000) (25,000) 102,000
Retirement of Convertible Notes......... - - (102,890) -
Purchase of treasury stock.............. - (5,392) - (174,870)
Exercise of stock options............... 1,688 378 3,335 378
Annuity contracts, variable and fixed
Deposits............................... 36,698 31,817 122,241 102,566
Maturities and withdrawals............. (33,355) (28,836) (99,982) (87,369)
Net transfer to variable
annuity assets........................ (19,405) (10,781) (62,966) (32,397)
Net increase in interest-sensitive
life account balances.................. 320 492 1,045 1,712
--------- --------- --------- ---------
Net cash used
in financing activities.............. (24,634) (31,859) (73,426) (74,145)
--------- --------- --------- ---------
Net increase (decrease) in cash.......... (1,685) (14,432) 2,509 4,197
Cash at beginning of period.............. 13,712 24,626 9,518 5,997
--------- --------- --------- ---------
Cash at end of period.................... $ 12,027 $ 10,194 $ 12,027 $ 10,194
========= ========= ========= =========

See accompanying notes to consolidated financial statements.

HORACE MANN EDUCATORS CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
SEPTEMBER 30, 1996 AND 1995
(DOLLARS IN THOUSANDS)

Note 1 - Basis of Presentation

The accompanying unaudited consolidated financial statements of Horace Mann
Educators Corporation (the "Company") have been prepared pursuant to the rules
and regulations of the Securities and Exchange Commission. Certain information
and note disclosures normally included in financial statements prepared in
accordance with generally accepted accounting principles have been condensed or
omitted. The Company believes that these financial statements contain all
adjustments (consisting of normal recurring accruals) necessary to present
fairly the Company's consolidated financial position as of September 30, 1996
and December 31, 1995 and the consolidated results of operations, changes in
shareholders' equity and cash flows for the three and nine months ended
September 30, 1996 and 1995.

It is suggested that these financial statements be read in conjunction with
the financial statements and the notes thereto contained in the December 31,
1995 Form 10-K filed by the Company.

The results of operations for the three and nine months ended September 30,
1996 are not necessarily indicative of the results to be expected for the full
year.

Note 2 - Debt

Indebtedness outstanding was as follows:

September 30, December 31,
1996 1995
------------- ------------

Short-term debt:
$100,000 Bank Credit Facility, IBOR + 1/2%
(6.1% as of September 30, 1996) .......... $ 50,000 $ 75,000

Long-term debt:
6-5/8% Senior Notes, due January 15, 2006.
Face amount less unaccrued discount
of $445 (6.7% imputed rate) .............. 99,555 -
4%/6-1/2% Convertible Notes, redeemed
February 1996 ............................ - 100,000
-------- --------
Total .................................. $149,555 $175,000
======== ========

Note 2 - Debt (continued)

Issuance of 6-5/8% Senior Notes ("Senior Notes") and Redemption of
Convertible Notes

On January 17, 1996, the Company issued $100,000 face amount of Senior
Notes at an effective yield of 6.7%, which will mature on January 15, 2006. The
net proceeds from the sale of the Senior Notes were used to finance most of the
cost of the redemption of the Convertible Notes. Interest on the Senior Notes is
payable semi-annually at a rate of 6-5/8%. The Senior Notes are redeemable in
whole or in part, at any time, at the Company's option, at a redemption price
equal to the greater of (i) 100% of their principal amount and (ii) the sum of
the present values of the remaining scheduled payments of principal and interest
thereon discounted, on a semi-annual basis, at the Treasury Yield (as defined in
the indenture) plus 15 basis points, together with accrued interest to the date
of redemption.

Note 3 - Investments

The following sets forth the composition and value of the Company's fixed
maturity securities portfolio by rating category. The Company has classified the
entire fixed maturity securities portfolio as available for sale, which is
carried at market value.

Percent of
Carrying Value September 30, 1996
----------------------------- ------------------------
Rating of Fixed September 30, December 31, Carrying Amortized
Maturity Securities(1) 1996 1995 Value Cost
- ----------------------- ------------- ------------ ---------- ----------

AAA ...................... 48.1% 45.9% $1,258,334 $1,252,890
AA ....................... 8.2 10.5 215,008 211,010
A ........................ 22.8 24.0 596,918 594,539
BBB ...................... 14.2 14.9 371,910 388,065
BB ....................... 2.6 1.1 66,717 46,852
B ........................ 3.6 3.2 93,415 89,165
CCC or lower ............. 0.1 - 1,391 2,101
Not rated(2) ............. 0.4 0.4 11,049 11,064
----- ----- ---------- ----------
Total ................ 100.0% 100.0% $2,614,742 $2,595,686
===== ===== ========== ==========

(1) Ratings are as assigned primarily by Standard & Poor's Corporation ("S&P")
when available, with remaining ratings as assigned on an equivalent basis
by Moody's Investors Service, Inc. ("Moody's"). Ratings for publicly traded
securities are determined when the securities are acquired and are updated
monthly to reflect any changes in ratings.

(2) This category is comprised primarily of private placement securities not
rated by either S&P or Moody's. The National Association of Insurance
Commissioners (the "NAIC") has rated 86.7% of these private placements as
investment grade. None of the remaining $0.9 million of private placements
were rated as investment grade by the NAIC in 1994 and are under review for
the assignment of a current rating.

Note 3 - Investments (continued)

The following table presents a maturity schedule of the Company's fixed
maturity securities. Expected maturities will differ from contractual maturities
because borrowers may have the right to call or prepay obligations with or
without call or prepayment penalties.

Percent Carrying
of Total Value
----------------------------- -------------
September 30, December 31, September 30,
Scheduled Maturity 1996 1995 1996
- ------------------ ------------- ------------ -------------

One year or less ...................... 6.2% 4.2% $ 161,271
After one year through five years ..... 29.0 30.4 756,719
After five years through ten years .... 33.9 32.4 887,080
After ten years through twenty years .. 18.8 18.7 492,596
After twenty years .................... 12.1 14.3 317,076
----- ----- ----------
Total ............................. 100.0% 100.0% $2,614,742
===== ===== ==========

There were no past-due, renegotiated or non-accrual mortgage loans as of
September 30, 1996 and December 31, 1995. The Company's valuation reserves for
losses on mortgage loans and real estate totaled $2,640 at September 30, 1996
and December 31, 1995. The Company's investment portfolio included foreclosed
real estate of $8,549 and $10,999 at September 30, 1996 and December 31, 1995,
respectively.

Note 4 - Shareholders' Equity

In September 1996, the common shareholders of HMEC approved and HMEC
adopted the HMEC Deferred Equity Compensation Plan ("Director Stock Plan") for
directors of the Company and reserved 300,000 shares for issuance pursuant to
the Director Stock Plan. Shares of the Company's common stock issued under the
Director Stock Plan may be either authorized and unissued shares or shares that
have been reacquired by the Company.

In September 1996, the common shareholders of HMEC approved authorization
of 1,000,000 shares of $0.001 par value preferred stock in HMEC. The Board of
Directors is authorized to (i) direct the issuance of the preferred stock in one
or more series, (ii) fix the dividend rate, conversion or exchange rights,
redemption price and liquidation preference, of any series of the preferred
stock, (iii) fix the number of shares for any series and (iv) increase or
decrease the number of shares of any series. No shares of preferred stock were
outstanding at September 30, 1996.

Note 5 - Purchase of the Company's Common Stock

On May 3, 1995, the Company entered into an agreement with The Fulcrum III
Limited Partnership and The Second Fulcrum III Limited Partnership (together,
"Fulcrum") providing for the disposition of the Company's common stock owned by
Fulcrum, constituting 44.5% (12.9 million shares) of the then outstanding common
stock.

Pursuant to that agreement, on May 3, the Company repurchased from Fulcrum
6.5 million shares of common stock. The shares were purchased at a price of
$169,000, before a contingent payment and expenses of the transaction. The
Company borrowed $140,000 of the purchase price under its existing Bank Credit
Facility and the balance was paid from cash on hand.

Also pursuant to the May 3, 1995 agreement, 6.1 million shares of common
stock owned by Fulcrum were sold to the public in a secondary public offering
which was completed on July 25, 1995 and the remaining 0.3 million shares were
distributed to Fulcrum's partners.

The secondary public offering also included the sale by the Company of
911,902 over-allotment shares, the $20,568 net proceeds of which were used to
reduce borrowings under the Bank Credit Facility.

Note 6 - Reinsurance

The Company recognizes the cost of reinsurance premiums over the contract
periods for such premiums in proportion to the insurance protection provided.
Amounts recoverable from reinsurers for unpaid claims and claim settlement
expenses, including estimated amounts for unsettled claims, claims incurred but
not reported and policy benefits are estimated in a manner consistent with the
insurance liability associated with the policy. The effect of reinsurance on
premiums written; premiums earned; and benefits, claims and settlement expenses
were as follows:

Ceded to Assumed
Gross Other from State
Amount Companies Facilities Net
-------- --------- ---------- --------

Three months ended September 30, 1996
- -------------------------------------
Premiums written ............................ $189,651 $ 5,691 $ 7,430 $191,390
Premiums earned ............................. 136,304 5,820 6,928 137,412
Benefits, claims and settlement expenses .... 100,168 7,019 7,220 100,369

Three months ended September 30, 1995
- -------------------------------------
Premiums written ............................ $174,244 $ 6,279 $ 7,769 $175,734
Premiums earned ............................. 132,325 5,607 6,325 133,043
Benefits, claims and settlement expenses .... 92,861 7,869 5,610 90,602

Nine months ended September 30, 1996
- ------------------------------------
Premiums written ............................ $553,374 $17,958 $21,405 $556,821
Premiums earned ............................. 405,474 18,310 21,505 408,669
Benefits, claims and settlement expenses .... 294,471 20,984 22,743 296,230

Nine months ended September 30, 1995
- ------------------------------------
Premiums written ............................ $513,907 $17,569 $21,912 $518,250
Premiums earned ............................. 395,318 15,427 17,608 397,499
Benefits, claims and settlement expenses .... 290,103 22,284 14,813 282,632

Note 6 - Reinsurance (continued)

The Company maintains an excess and catastrophe treaty reinsurance program.
Beginning in 1996, the Company reinsures 95% of catastrophe losses above a
retention of $5.5 million per occurrence up to $54 million per occurrence with
an aggregate annual deductible of $2.0 million. For liability coverages, the
Company reinsures each loss up to $10 million above a retention of $500,000. In
addition, the Company reinsures each property loss above a retention of $500,000
up to $1.5 million in 1996.

In 1995, the Company reinsured 95% of catastrophe losses above a retention
of $6 million per occurrence up to $19 million per occurrence. With regard to
liability coverages in 1995, the Company reinsured each loss up to $7 million
above a retention of $200,000. The Company reinsured each property loss above a
retention of $200,000 up to $1.5 million in 1995.

MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Statements made in the following discussion that state the Company's or
management's intentions, hopes, beliefs, expectations or predictions of the
future are forward-looking statements. It is important to note that the
Company's actual results could differ materially from those projected in such
forward-looking statements due to, among other risks and uncertainties inherent
in the Company's business, the following important factors:

. Changes in the composition of the Company's assets and liabilities through
acquisitions or divestitures.

. Prevailing interest rate levels, including the impact of interest rates on
(i) unrealized gains and losses on the Company's investment portfolio and
the related after-tax effect on the Company's shareholders' equity and
total capital and (ii) the book yield of the Company's investment
portfolio.

. The impact of fluctuations in the capital markets on the Company's ability
to refinance outstanding indebtedness or repurchase shares of the Company's
outstanding common stock.

. The frequency and severity of catastrophes such as hurricanes, earthquakes
and storms, and the ability of the Company to maintain a favorable
catastrophe reinsurance program.

. The Company's ability to develop and expand its agency force and its direct
product distribution systems, as well as the Company's ability to maintain
and secure product sponsorships by local, state and national education
associations.

. The competitive impact of new entrants such as mutual funds into the tax
deferred annuity products markets, and the Company's ability to profitably
expand its property and casualty business in highly competitive
environments.

. Changes in insurance regulations, including (i) those effecting the ability
of the Company's insurance subsidiaries to distribute cash to the holding
company and (ii) those impacting the Company's ability to profitably write
property and casualty or health insurance policies in one or more states.

. Changes in federal income tax laws and changes resulting from federal tax
audits effecting corporate tax rates or taxable income, and regulations
changing the relative tax advantages of the Company's life and annuity
products to customers.

. The Company's ability to maintain favorable claims-paying ability ratings.

. Adverse changes in policyholder mortality and morbidity rates.

NINE MONTHS ENDED SEPTEMBER 30, 1996
COMPARED WITH
NINE MONTHS ENDED SEPTEMBER 30, 1995

Insurance Premiums and Contract Charges Earned

Insurance premiums and contract charges earned, which excludes annuity and
life contractholders' deposits, increased 2.8% for the nine months ended
September 30, 1996, compared to the same period in 1995.

Insurance premiums written and contract deposits of $556.8 million for the
nine months ended September 30, 1996 increased 7.4%, compared to $518.3 million
for the same period in 1995, driven principally by 19.1% growth in annuity
deposits. Annual premium of approximately $7 million for Horace Mann's contract
to provide professional liability insurance for the 2.2 million members of the
National Education Association is included in the Company's total insurance
premiums written and contract deposits for the three and nine months ended
September 30, 1996. No such premium was written in 1995. Insurance premiums
written and contract deposits in the Company's primary product lines, automobile
(excluding involuntary), property, annuity and life, grew 7.0%, increasing to
$489.7 million for the nine months ended September 30, 1996, compared to $457.6
million for the same period in 1995. Involuntary automobile business includes
allocations of business from state mandatory automobile insurance facilities and
assigned risk business. Involuntary automobile premiums written for the nine
months ended September 30, 1996 decreased 7.2% compared to the first nine months
of 1995.

Automobile (excluding involuntary) and homeowners earned premiums increased
2.2% to $289.8 million for the nine months ended September 30, 1996, compared to
$283.7 million for the same period in 1995, primarily as a result of a 4.3%
increase in automobile (excluding involuntary) and homeowners policies in force,
partially offset by a 0.3% decrease in average premium earned per automobile
policy. The 773,000 automobile (excluding involuntary) and homeowners policies
in force at September 30, 1996 represented an increase of 32,000 policies since
September 30, 1995 and an increase of 30,000 policies since December 31, 1995.

Automobile (excluding involuntary) and homeowners premiums written
increased 3.4% to $296.9 million for the nine months ended September 30, 1996,
compared to $287.0 million for the same period in 1995. For the nine months
ended September 30, 1996, new direct premiums written of $31.8 million increased
18.7% compared to $26.8 million for the same period last year. Renewal direct
premiums written of $268.4 million for the nine months ended September 30, 1996
increased 1.9% compared to $263.5 million for the same period in 1995.

For the nine months ended September 30, 1996, life insurance premiums and
contract charges earned were $50.9 million, compared to $48.5 million for the
same period in 1995, representing an increase of 4.9%. Life insurance in force
on September 30, 1996 increased 4.2% compared to a year earlier. The lapse rate
of 8.0% for the nine months ended September 30, 1996 increased slightly compared
to 7.7% for the same period in 1995.

Annuity contract charges earned increased 41.3% to $6.5 million for the
nine months ended September 30, 1996, compared to $4.6 million for the same
period in 1995, due to a 39% increase in variable annuity cash value on deposit.
Total annuity deposits received during the nine months ended September 30, 1996
increased 19.1% to $122.2 million, compared to $102.6 million for the same
period in 1995, reflecting a $5.5 million, or 6.6%, increase in scheduled
deposits for retirement annuities and a $14.1 million, or 72.3%, increase in
single premiums and rollover deposits from other companies.

Group insurance segment premiums earned were $44.9 million for the nine
months ended September 30, 1996, compared to $42.1 million for the same period
in 1995. However, premiums written of $13.7 million for the three months ended
September 30, 1996 represented a decrease of 6.8% compared to the $14.7 million
reported for the same period last year as a result of a decline in new business.

Net Investment Income

Net investment income of $149.2 million for the nine months ended September
30, 1996 increased 0.7% compared to the same period in 1995. Investments (at
amortized cost) increased 1.4%, or $36.2 million, from September 30, 1995. The
pretax yield on average investments was 7.4% (4.9% after tax) for both the nine
months ended September 30, 1996 and the same period in 1995.

Realized Investment Gains and Losses

Realized investment gains were $2.6 million for the first nine months of
1996, compared to $5.7 million for the same period in 1995.

Benefits, Claims and Settlement Expenses

Total benefits, claims and settlement expenses increased 4.8% to $296.2
million for the nine months ended September 30, 1996, compared to $282.6 million
for the same period in 1995.

Property and casualty claims and settlement costs were $231.3 million for
the nine months ended September 30, 1996, compared to $224.7 million for the
same period in 1995. The property and casualty loss ratio was 75.5% for the nine
months ended September 30, 1996, compared to 74.3% for the same period in 1995.
After nine months, higher first quarter 1996 losses from severe winter weather
and third quarter 1996 losses from hurricanes were partially offset by continued
favorable trends in voluntary automobile losses. Catastrophe losses for the nine
months ended September 30, 1996 were $19.3 million, compared to catastrophe
losses of $10.7 million for the same period in 1995. Hurricanes Fran and Bertha,
which occurred during the third quarter of 1996, represented $7.8 million in
losses. Catastrophe losses were $2.3 million in the third quarter of 1995.

Life benefits were $24.7 million for the nine months ended September 30,
1996, reflecting a 5.6% increase, compared to $23.4 million for the same period
in 1995. Group life and health claims of $40.2 million for the nine months ended
September 30, 1996 increased 16.5%, compared to the $34.5 million in claims
recorded in the same period in 1995, due to an increase in group medical claims.
The group segment loss ratio was 89.4% for the nine months ended September 30,
1996, compared to 82.7% for the same period in 1995.

Interest Credited to Policyholders

Interest credited to policyholders was $71.2 million for the nine months
ended September 30, 1996, 5.3% more than the $67.6 million interest credited for
the first nine months of 1995. Interest credited to fixed rate annuity contracts
increased 3.8% to $57.5 million for the nine months ended September 30, 1996,
from $55.4 million for the same period in 1995. The increase reflects a higher
average annual interest rate credited of 5.6% for the nine months ended
September 30, 1996, compared to 5.5% for the first nine months of 1995, and a
growth of fixed rate annuity accumulated deposits of 1.2%.

Life insurance interest credited increased $1.5 million, or 12.3%, to $13.7
million for the nine months ended September 30, 1996, compared to the same
period in 1995, primarily as a result of continued growth in the interest-
sensitive whole life insurance reserves and account balances.

Policy Acquisition and Operating Expenses

Policy acquisition and operating expenses represent the Company's insurance
underwriting expenses. For the nine months ended September 30, 1996, policy
acquisition and operating expenses of $109.3 million increased $0.6 million, or
0.6%, compared to $108.7 million for the first nine months of 1995. For the
nine months ended September 30, 1996, the property and casualty expense ratio
was 19.2% compared to 19.5% for the same period in 1995.

Amortization of Intangible Assets

Amortization of intangible assets decreased by $0.3 million to $8.5 million
for the nine months ended September 30, 1996, compared to $8.8 million for the
same period in 1995, as a result of a scheduled decrease in the non-cash
amortization of the value of acquired insurance in force related to the 1989
acquisition of the Company.

Interest Expense

The Company's interest expense of $8.0 million for the nine months ended
September 30, 1996 was $0.4 million, or 4.8%, less than the same period in 1995
as a result of subsequent repayments of borrowings on the Bank Credit Facility
related to the repurchase of shares of its common stock during the second
quarter of 1995. Interest expense of $2.5 million for the third quarter of 1996
was $1.1 million less than the $3.6 million reported for the same period in 1995
and is expected to decrease in future quarters as the Company continues to repay
this short-term debt.

Income Tax Expense

The 1996 effective income tax rate was 26%, compared to the 1995 effective
income tax rate of 29%. Income from investments in tax-advantaged securities
reduced the effective income tax rate 4 percentage points in both 1996 and 1995.
Acquisition related tax benefits reduced the effective income tax rate 5
percentage points in 1996 and 4 percentage points in 1995. The 1995 effective
income tax rate also reflected the charge for additional rights relating to the
repurchase of shares of the Company's common stock in 1995 that was not
deductible for federal income tax purposes.

Operating Income

Operating income (income before realized investment gains and losses, 1996
debt retirement costs and the 1995 cost of additional rights related to the
share repurchase) was $48.0 million for the nine months ended September 30,
1996, compared to $50.1 million for the same period in 1995. Operating income in
the first nine months of 1996 reflected high first quarter severe winter storm
losses and high third quarter hurricane losses partially offset by excellent
voluntary auto results and an increase in annuity segment earnings.

Included in the Company's operating income are non-cash charges for the
amortization of the value of acquired insurance in force and goodwill related to
the 1989 acquisition of the Company. Excluding these non-cash charges for the
amortization of intangible assets, operating income was $53.5 million for the
nine months ended September 30, 1996 compared to $55.8 million for the first
nine months of 1995.

Property and casualty segment operating income was $36.5 million for the
nine months ended September 30, 1996, compared to $39.8 million for the same
period in 1995. Higher first quarter 1996 losses from severe winter weather and
after tax catastrophe losses of $5.5 million from hurricanes in the third
quarter of 1996 were partially offset by continued favorable trends in voluntary
automobile losses. The property and casualty combined loss and expense ratio for
the nine months ended September 30, 1996 was 94.7%, compared to the 93.9%
reported for the same period in 1995.

Life insurance segment operating income of $7.3 million for the nine months
ended September 30, 1996 increased 2.8% compared to the $7.1 million reported
for the same period in 1995, although 1996 reflected higher mortality
experience.

Annuity segment operating income of $12.1 million for the nine months ended
September 30, 1996 increased 13.1%, compared to the same period in 1995,
resulting primarily from an increase in cash value on deposit. Total
accumulated fixed and variable annuity cash value on deposit of $2,002.3 million
increased $186.8 million, or 10.3%, compared to September 30, 1995. This
increase resulted from a net increase in funds on deposit of 7.6% plus net
increases in market value of underlying mutual funds of $51.8 million.

The group life and health segment reported an operating loss of $1.7
million for the nine months ended September 30, 1996, compared to operating
income of $0.2 million for the same period in 1995. The group life and health
combined loss and expense ratio increased to 112.9% for the nine months ended
September 30, 1996, compared to 106.9% for the same period in 1995, primarily
due to an increase in group medical claims.

Net Income

Net income, which includes realized investment gains, for the nine months
ended September 30, 1996 was $48.8 million, or $2.08 per share, reflecting a
7.0% decrease in net income and a 7.8% increase in net income per share on a
fully diluted basis compared to the same period in 1995. The share repurchase
completed in May 1995 and the redemption of the convertible notes in February
1996 resulted in the increase in net income per share. Realized investment gains
after tax were $1.7 million for the nine months ended September 30, 1996,
compared to $3.7 million for the same period in 1995. Net income for the nine
months ended September 30, 1996 reflects a reduction of $0.9 million, or $0.04
per share, for the costs of the early redemption of $100 million

of convertible notes. Net income for the nine months ended September 30, 1995
included a reduction of $1.3 million, or $0.05 per share, for the cost of the
additional rights granted in connection with the share repurchase.

LIQUIDITY AND FINANCIAL RESOURCES

Investments

The Company's investment strategy emphasizes high quality investment grade,
publicly traded fixed income securities. At September 30, 1996, fixed income
securities comprised 95.5% of total investments. Of the fixed income investment
portfolio, 94.2% was investment grade and 99.5% was publicly traded. The
average quality of the total fixed income portfolio was AA- at September 30,
1996.

The duration of the investment portfolio is managed to provide cash flow to
satisfy policyholder liabilities as they become due. The average option
adjusted duration of total investments was 4.5 years at September 30, 1996 and
4.4 years at December 31, 1995. The Company has included in its annuity
products substantial surrender penalties to reduce the likelihood of unexpected
increases in policy or contract surrenders. All annuities issued since 1982 and
approximately 60% of all outstanding fixed annuity accumulated cash values are
subject to surrender penalties.

The commercial mortgage obligation ("CMO") segment of the Company's
investment portfolio has more predictable and stable cash flow characteristics
than the broader CMO market and is primarily utilized by the Company to manage
interest rate volatility. At September 30, 1996, approximately 5.9% of the
Company's investment portfolio was invested in CMOs. At September 30, 1996, the
credit quality ratings of the Company's investments in CMOs were AAA and NAIC 1,
which are the highest ratings. The market value of CMOs owned by the Company at
September 30, 1996 was $161.7 million, equal to the amortized cost. The average
duration of the Company's investment in CMOs was 4.1 years at September 30,
1996.

Cash Flow

The short-term liquidity requirements of the Company, within a 12-month
operating cycle, are for the timely payment of claims and benefits to
policyholders, operating expenses, interest payments and federal income taxes.
Cash flow in excess of these amounts has been used to pay dividends to
shareholders and retire short-term debt. Long-term liquidity requirements,
beyond one year, are principally for the payment of future insurance policy
claims and benefits, and retirement of long-term notes.

Operating Activities

As a holding company, HMEC conducts its principal operations in the
personal lines segment of the property and casualty and life insurance
industries through its subsidiaries. HMEC's insurance subsidiaries generate cash
flow from premium and investment income, generally well in excess of their
immediate needs for policy obligations, operating expenses and other cash
requirements. Net cash provided by operating activities was $102.7 million for
the nine months ended September 30, 1996 compared to $117.2 million for the same
period in 1995. In both years, cash provided by operating activities primarily
reflected net cash provided by the insurance subsidiaries.

Investing Activities

HMEC's insurance subsidiaries maintain significant investments in fixed
maturity securities to meet future contractual obligations to policyholders. In
conjunction with its management of liquidity and other asset/liability
management objectives, the Company, from time to time, will sell fixed maturity
securities prior to maturity and reinvest the proceeds in other investments with
different interest rates, maturities or credit characteristics. Accordingly,
the Company has classified the entire fixed maturities portfolio as available
for sale. During the first nine months of 1996, net cash used in investing
activities was $26.8 million. This net amount reflects $722.2 million in
purchases of fixed maturity and other investments, funded by investment sales or
maturities of $695.4 million and net cash provided by operating activities.

Financing Activities

Financing activities include the receipt and withdrawal of funds by annuity
policyholders, payment of scheduled dividends, transactions related to the
Company's common stock and borrowings and repayments under the Company's debt
facilities. Shareholder dividends paid for the nine months ended September 30,
1996 were $7.7 million.

For the nine months ended September 30, 1996, receipts from annuity
contracts of $122.2 million were greater than contract maturities and
withdrawals of $100.0 million. Net transfers to variable annuity assets were
$63.0 million during the first nine months of 1996 compared to $32.4 million for
the same period last year.

On January 17, 1996, the Company issued $100.0 million face amount of
6 5/8% Senior Notes ("Senior Notes"), which will mature on January 15, 2006, at
a discount of 0.5%. The net proceeds from the sale of the Senior Notes were used
to finance most of the cost of the full redemption of the $100.0 million of
outstanding convertible notes at an aggregate cost of $102.9 million. The
redemption of the convertible notes extended the maturity of the Company's long-
term debt and eliminated the potential dilutive impact of these securities. The
Senior Notes have an investment grade rating from both Standard & Poor's
Corporation ("S&P") (A-) and Moody's Investors Service, Inc. ("Moody's") (Baa2)
and are traded on the New York Stock Exchange (HMN 6 5/8).

As of September 30, 1996, the Company had short-term debt comprised of
$50.0 million outstanding under the Bank Credit Facility. The Company repaid
$25.0 million of Bank Credit Facility indebtedness during the first nine months
of 1996.

Capital Resources

Historically, the Company's insurance subsidiaries have generated capital
in excess of what has been needed to support business growth. These excess
amounts have been paid to HMEC through dividends. HMEC has then utilized these
dividends and its access to the capital markets to retire long-term debt,
repurchase shares of its common stock, increase dividends to its shareholders
and fulfill other corporate purposes. Management anticipates that the Company's
sources of capital will continue to generate capital in excess of the needs for
business growth, debt interest payments and shareholder dividends.

The total capital of the Company was $601.0 million at September 30, 1996,
including $99.6 million of long-term debt and $50.0 million of short-term debt.
Long-term debt as a percentage of total shareholders' equity was 22.1% as of
September 30,

1996, compared to 21.3% as of December 31, 1995, with the increase occurring as
a result of a reduction in unrealized gains attributable to the Company's
investment portfolio. The Company's ratio of earnings to fixed charges for the
nine months ended September 30, 1996 was 9.3x.

Total shareholder dividends were $7.7 million for the nine months ended
September 30, 1996. In February 1996, the Board of Directors authorized the
fourth consecutive annual increase in the Company's dividend. The regular
quarterly dividend increased by 22% to $0.11 per share.

Shareholders' equity was $450.8 million at September 30, 1996, including an
unrealized gain in the Company's investment portfolio of $12.4 million after tax
($19.1 million pretax). The market value of the Company's common stock and the
market value per share were $773.4 million and $32 7/8, respectively, at
September 30, 1996. Book value per share was $19.16 at September 30, 1996,
$18.63 excluding investment market value adjustments.

PART II: OTHER INFORMATION

Item 4: Submission of Matters to a Vote of Security Holders

At the Company's Annual Meeting of Shareholders held on September 11,
1996, 21,182,223 shares of Common Stock were represented and entitled to
vote. The results of the matters submitted to a vote of security holders
are shown in the table below.

Votes Votes
For Against Abstentions
---------- -------- -----------

Approval of the Horace Mann
Educators Corporation Deferred
Equity Compensation Plan for
Directors. 19,996,431 1,096,359 67,587

Approval of, for purposes of
Internal Revenue Code Section
162(m), certain provisions of
the Company's 1996 Annual Cash
Incentive Plan. 20,545,670 57,018 65,535

Approval of, for purposes of
Internal Revenue Code Section
162(m), certain provisions of
the Company's 1996 Long-Term
Cash Incentive Plan. 20,539,351 576,772 66,100

Approval of certain amendments
to the Company's 1991 Stock
Incentive Plan. 20,752,249 360,594 69,380

Approval of an amendment to
the Company's Certificate of
Incorporation to authorize the
issuance of 1,000,000 shares
of Preferred Stock. 10,259,760 9,717,687 96,357

Failure of an amendment to the
Company's Certificate of
Incorporation providing that
no action may be taken by the
Shareholders of the Company
except at an annual or special
meeting of the Shareholders. 8,330,061 11,666,346 97,542

Ratification of the
appointment of KPMG Peat
Marwick LLP, independent
certified public accountants,
to serve as the Company's
auditors for the fiscal year
ending December 31, 1996. 21,007,130 145,423 4,730

Item 6: Exhibits and Reports on Form 8-K

(a) The following items are filed as Exhibits.

(3) Articles of incorporation and bylaws:
3.1 Restated Certificate of Incorporation of HMEC, filed with
the Delaware Secretary of State on October 6, 1989.

3.2 Certificate of Amendment to Restated Certificate of
Incorporation of HMEC, filed with the Delaware Secretary of
State on October 18, 1991.

3.3 Certificate of Amendment to Restated Certificate of
Incorporation of HMEC, filed with the Delaware Secretary of
State on August 23, 1995.

3.4 Certificate of Amendment to Restated Certificate of
Incorporation of HMEC, filed with the Delaware Secretary of
State on September 23, 1996.

(10) Material contracts. Management contracts and compensatory plans
are indicated by an asterisk (*).
10.1* Horace Mann Educators Corporation Deferred Equity
Compensation Plan for Directors.

10.2* Horace Mann Educators Corporation 1991 Stock Incentive Plan,
incorporated by reference to Exhibit 10.4 to HMEC's Annual
Report on Form 10-K for the year ended December 31, 1991,
filed with the Securities and Exchange Commission on March
27, 1992.

10.2(a)* Specimen Employee Stock Option Agreement under the Horace
Mann Educators Corporation 1991 Stock Incentive Plan,
incorporated by reference to Exhibit 10.5 to HMEC's Annual
Report on Form 10-K for the year ended December 31, 1991,
filed with the Securities and Exchange Commission on March
27, 1992.

10.2(b)* Specimen Director Stock Option Agreement under the Horace
Mann Educators Corporation 1991 Stock Incentive Plan,
incorporated by reference to Exhibit 10.6 to HMEC's Annual
Report on Form 10-K for the year ended December 31, 1991,
filed with the Securities and Exchange Commission on March
27, 1992.

10.2(c)* Amendment to Horace Mann Educators Corporation 1991 Stock
Incentive Plan, dated September 11, 1996.

(11) Statement re computation of per share earnings.

(27) Financial Data Schedule.

(b) No reports on Form 8-K were filed by the Company during the third
quarter of 1996.

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.

HORACE MANN EDUCATORS CORPORATION
(Registrant)

Date November 12, 1996 Paul J. Kardos
--------------------------- -----------------------------------

Paul J. Kardos, President and
Chief Executive Officer

Date November 12, 1996 Larry K. Becker
--------------------------- -----------------------------------

Larry K. Becker, Executive
Vice President and Chief
Financial Officer