Exhibit 99.1
[Horace Mann Educators Corporation logo]
Dwayne D. Hallman
Senior Vice President -
Finance
Horace Mann Educators
Corporation
(217) 788-5708
www.horacemann.com
HORACE MANN REPORTS RESULTS
FOR SECOND QUARTER
SPRINGFIELD, Ill., August 4, 2003 -- Horace Mann Educators Corporation
(NYSE:HMN) today reported net income of $2.1 million (5 cents per share) and
$10.2 million (24 cents per share), respectively, for the three and six months
ended June 30, 2003, compared to net losses of $18.4 million (45 cents per
share) and $2.8 million (7 cents per share) for the three and six month periods
ended June 30, 2002. Included in net income were net realized gains on
securities of $2.2 million ($1.5 million after tax, or 3 cents per share) for
the second quarter of 2003 and net realized losses of $2.5 million ($1.6 million
after tax, or 4 cents per share) for the first half of 2003, compared to net
realized losses of $41.3 million ($26.9 million after tax, or 65 cents per
share) and $38.7 million ($25.2 million after tax, or 61 cents per share) for
the comparable periods in 2002. All per-share amounts are stated on a diluted
basis.
As previously announced, the company's net income for the second quarter and six
months ended June 30, 2003 was unfavorably affected by approximately 15 cents
per share due to an increase in property and casualty claims reserves. Based on
June 30, 2003 reserve studies, total property and casualty reserves were
increased by $10 million compared to March 31, 2003.
In July 2002, Horace Mann announced the restructuring of its claims operations
to improve operating and cost efficiencies and customer service. While the
company has begun to realize improvements in its claims handling process and is
confident in the ultimate benefits to be gained from the redesign of its claims
operation, those benefits have not been realized as quickly as the company had
originally anticipated. In addition, the estimation of claims costs, settlement
rates and severity has been complicated in recent quarters due to the degree of
change involved. As a result of these factors, and in light of the pattern of
adverse prior years' reserve development observed over the last four quarters,
the June 30, 2003 reserve re-estimate reflects a strengthening of prior years'
reserves, primarily voluntary automobile, and an increased level of conservatism
in the less developed 2002 and 2003 accident years.
Net income was also adversely impacted by widespread severe weather experienced
in the current period. Second quarter 2003 catastrophe losses of $7.3 million
after tax were nearly three times greater than the same period last year and
approximately 6 cents per share above expected levels. Compared to 2002, an
increase in losses from weather-related catastrophes decreased net income $4.6
million for the quarter and $5.9 million for the six months. Non-catastrophe
weather-related losses were also greater in 2003 compared to the prior year --
by approximately $2.1 million after tax in the second quarter and $3.2 million
after tax for the six months. In addition, net income comparisons to prior year
continued to be negatively impacted by (1) lower interest rates and decreases in
investment income related to investment credit issues experienced in 2002 and
(2) lower margins on variable annuities.
These negative prior year comparisons were partially offset by the impact of
property and casualty rate increases on earned premiums -- with the growth in
average premium per policy outpacing current accident year loss costs -- and the
company's restructuring of its Massachusetts automobile business.
"We are reducing our guidance for 2003 net income before realized investment
gains and losses to 90 cents to $1.00 per share for the full year, which
primarily reflects the increase in property and casualty reserves, higher levels
of catastrophe losses and lower investment income," said Louis G. Lower II,
President and Chief Executive Officer.
Results of Operations
The company's core lines premiums written and contract deposits increased 7 and
6 percent compared to the second quarter and first six months of 2002,
respectively, primarily resulting from rate increases in the property and
automobile lines. In addition, growth in new annuity deposits improved in the
second quarter.
"Our June 30, 2003 agent count of 883 represented a 6 percent increase over the
last 12 months," Lower said. "In the first half of 2003, average agent
productivity for all lines of business declined compared to the same period in
2002, with total sales slightly ahead of prior year. However, second quarter
average agent productivity improved both sequentially and compared to a year ago
and total sales increased 7 percent, primarily reflecting increased annuity
volume."
Property and Casualty
Written premiums for voluntary property and casualty insurance increased 7
percent in the current quarter and 8 percent in the six months. The growth was a
result of increases in average written premium per policy of approximately 6
percent for automobile and 14 percent for homeowners compared to the first six
months of 2002. Excluding Massachusetts, the number of automobile policies in
force decreased slightly compared to a year earlier, while homeowners policies
in force decreased by 2 percent.
2
For the second quarter of 2003, the property and casualty segment recorded a net
loss of $4.5 million, compared to net income of $3.3 million for the same period
in 2002. Horace Mann's property and casualty statutory combined ratio was 110.7
percent for the second quarter of 2003, compared to 107.0 percent a year
earlier. For the six months, property and casualty segment net income was $2.1
million and the combined ratio was 105.2 percent, compared to $10.5 million and
103.7 percent, respectively, a year earlier. In 2002, the combined ratio
reflected the impact of class action litigation charges which represented 1.2
and 0.6 percentage points for the second quarter and six months, respectively.
The property and casualty statutory expense ratio of 23.6 percent for the first
six months of 2003 was comparable to the prior year.
The 2003 property and casualty results included adverse prior years' loss
reserve development, representing 7.4 percentage points of the combined ratio,
or $6.4 million after tax, in the second quarter and 5.4 percentage points, or
$9.2 million after tax, for the six months. Excluding the provision for class
action litigation recorded in the second quarter of 2002, development of prior
years' reserves had a minimal impact on earnings for the second quarter and
first six months of 2002. Compared to last year, the higher level of
weather-related catastrophe losses represented an increase in the combined ratio
of approximately 5 and 3 percentage points for the quarter and six months,
respectively; non-catastrophe weather losses further increased the ratio by
approximately 2 percentage points for the same periods.
The voluntary automobile statutory loss ratio for the second quarter of 2003 was
81.8 percent, compared to 82.1 percent for the same period in 2002. The current
period included 10.5 percentage points due to adverse development of prior
years' reserves. The second quarter of 2002 included 1.7 percentage points due
to the provision for class action litigation. The increase in average voluntary
automobile premium in the current period exceeded the increase in average
current accident year loss costs.
The property statutory loss ratio of 90.0 percent for the first half of 2003
increased 8.4 percentage points from the same period in 2002. Higher catastrophe
losses in the current period accounted for a 10.7 percentage point increase in
the loss ratio compared to the prior year while non-catastrophe weather losses
increased the ratio by approximately 4 percentage points. These adverse impacts
were partially offset by the increase in average earned premium per policy.
Annuity
New annuity deposits increased 8 percent in the current quarter. The six month
growth of 5 percent primarily reflected a 24 percent increase in new single
premium and rollover deposits. New scheduled annuity deposits decreased 4
percent compared to the first half of 2002. At June 30, 2003, retention of fixed
and variable accumulated annuity deposits for the prior 12 months was 95 percent
and 92 percent, compared to 94 percent and 93 percent, respectively, a year
earlier. The number of annuity contracts outstanding increased 3 percent over
that 12 month period.
3
New annuity sales by Horace Mann agents increased 11 percent in the quarter; six
month results were comparable to the prior year. Total annuity sales decreased 1
percent for both the quarter and six months, including Horace Mann's independent
agent distribution initiative. Annuity sales for the second quarter of 2002
reflected the successful launch of the independent agent initiative and included
over $6 million in new business from Chicago public school employees. Ongoing
production from independent agents has shown steady sequential growth for each
month in 2003.
Annuity segment net income was $3.5 million for the second quarter of 2003
compared to $4.5 million for the same period in 2002, while six month net income
was $5.8 million in the current year and $9.2 million a year earlier. Current
period earnings were adversely impacted by an after-tax reduction in the net
interest margin of $1.8 million for the quarter and $2.9 million for the six
months, reflecting lower investment income due to lower interest rates and
investment credit issues in 2002. In addition, valuation of annuity segment
deferred acquisition costs and value of acquired insurance in force at June 30,
2003 resulted in an after-tax decrease in amortization of $0.5 million for the
current quarter reflecting higher-than-expected market appreciation and improved
persistency, partially offset by a decline in the interest margin. For the six
months, the valuation increased amortization $0.1 million after tax. Similar
valuations a year earlier decreased after-tax amortization $0.3 million for the
quarter and $0.4 million for the six months. A decrease in reserves for
guaranteed minimum death benefits (GMDB) increased after-tax income by $0.4
million in the current quarter and $0.2 million in the six months, compared to a
decrease in after-tax income of $0.2 million for both periods in 2002. In spite
of sequential improvement in the second quarter, 2003 fee income related to
variable annuity deposits decreased compared to the prior year, primarily as a
result of adverse market conditions.
Life
Life segment insurance premiums and contract deposits declined slightly for the
six months compared to the same period a year earlier. However, life policies
and insurance in force were comparable to December 31, 2002.
Life segment net income of $3.7 million for the quarter and $7.5 million for the
six months each declined $1.6 million compared to the prior year, primarily
reflecting declines in investment income. Valuation of life segment deferred
acquisition costs at June 30, 2003 resulted in an after-tax decrease in
amortization of $0.1 million for the six months, recorded in the first quarter.
A similar valuation in 2002 resulted in a reduction in amortization of $0.4
million after tax for the quarter and six months. In the current period, there
was a small decrease in mortality costs compared to a year earlier.
Realized Investment Gains and Losses
In the second quarter of 2003, after-tax realized investment gains were $1.5
million. In the current quarter, impairment of one security in the amount of
$1.2 million after tax was offset by gains from portfolio transactions. For the
first half of 2003, the company realized investment losses of $1.6 million after
tax. In the second
4
quarter of 2002, the company recorded impairment charges, largely related to
fixed income securities of companies in the communications sector, which
represented the primary component of the $26.9 million and $25.2 million
after-tax realized investment losses for the second quarter and six months,
respectively.
Total shares outstanding on June 30, 2003 and 2002 were 42,721,940 and
40,848,319, respectively. The company has not repurchased shares of its common
stock since the third quarter of 2000.
Book value per share was $13.81 at June 30, 2003, an increase of 28 percent
compared to 12 months earlier, including the effects of unrealized investment
gains and losses. Excluding unrealized investment gains and losses, book value
per share increased slightly compared to June 30, 2002. Return on equity based
on net income was 5 percent for the twelve months ended June 30, 2003.
Horace Mann -- the largest national multiline insurance company focusing on
educators' financial needs -- provides retirement annuities, life insurance,
property/casualty insurance, and other financial solutions. Founded by educators
for educators in 1945, the company is headquartered in Springfield, Ill. Horace
Mann is publicly traded on the New York Stock Exchange as HMN. For more
information, visit www.horacemann.com.
Statements included in this news release that are not historical in nature are
forward-looking within the meaning of the Private Securities Litigation Reform
Act of 1995 and are subject to certain risks and uncertainties. Horace Mann
undertakes no obligation to publicly update or revise any forward-looking
statements, whether as the result of new information, future events or
otherwise. Information concerning factors that could cause actual results to
differ materially from those in forward-looking statements is contained from
time to time in the company's public filings with the Securities and Exchange
Commission.
# # #
HORACE MANN EDUCATORS CORPORATION
Digest of Earnings and Highlights
(Dollars in Millions, Except Per Share Data)
Quarter Ended Six Months Ended
June 30, June 30,
------------------------- ----------------------------
2003 2002 % Change 2003 2002 % Change
---- ---- -------- ---- ---- --------
DIGEST OF EARNINGS
- ------------------
Net income (loss) $ 2.1 ($18.4) $ 10.2 ($2.8)
Net income (loss) per share:
Basic $ 0.05 ($0.45) $ 0.24 ($0.07)
Diluted $ 0.05 ($0.45) $ 0.24 ($0.07)
Weighted average number of shares and equivalent shares:
Basic 42.7 40.8 42.7 40.8
Diluted 42.9 41.3 42.9 41.3
HIGHLIGHTS
- ----------
Operations
- ----------
Insurance premiums written
and contract deposits
Core lines $234.5 $219.8 6.7% $ 454.0 $ 429.7 5.7%
Total 234.7 218.6 7.4% 454.3 430.3 5.6%
Return on equity (A) 4.7% 2.4%
Property & Casualty statutory
combined ratio (B) 110.7% 107.0% 105.2% 103.7%
Property & Casualty statutory combined
ratio before catastrophes (B) 102.3% 103.8% 100.2% 102.0%
Experienced agents 492 512 -3.9%
Financed agents 391 324 20.7%
Total agents 883 836 5.6%
Additional Per Share Information
- --------------------------------
Dividends paid $0.105 $0.105 - $ 0.21 $ 0.21 -
Book value (C) $ 13.81 $ 10.78 28.1%
Financial Position
- ------------------
Total assets $5,151.1 $4,856.8 6.1%
Short-term debt - -
Long-term debt 144.7 212.8
Total shareholders' equity 589.9 440.5 33.9%
(A) Based on 12-month net income and average quarter-end shareholders' equity.
(B) Consistent with management's evaluation of the property and casualty
operations, the combined ratio, which is the sum of the loss ratio and the
expense ratio, is computed based on financial information prepared in
accordance with statutory accounting principles and as reported to state
insurance departments. Expenses are divided by net written premiums.
Statutory expenses differ from GAAP expenses primarily with regard to
policy acquisition costs, which are not deferred and amortized for
statutory purposes, but rather recognized as incurred. The sum of losses
and loss adjustment expenses incurred is divided by net earned premiums.
Property and casualty statutory net written premiums and net earned
premiums differ from the comparable GAAP amounts primarily with regard to
the classification of certain service fees and escrowed amounts.
(C) Before the market value adjustment for investments, book value per share
was $10.52 at June 30, 2003 and $10.34 at June 20, 2002. Ending shares
outstanding were 42,721,940 at June 30, 2003, 42,691,244 at December 31,
2002 and 40,848,319 at June 20, 2002.
-1-
HORACE MANN EDUCATORS CORPORATION
Statements of Operations and Income Reconciliations
(Dollars in Millions, Except Per Share Data)
Quarter Ended Six Months Ended
June 30, June 30,
---------------------------- -------------------------------
2003 2002 % Change 2003 2002 % Change
---- ---- -------- ---- ---- --------
STATEMENTS OF OPERATIONS
- ------------------------
Insurance premiums written
and contract deposits (A) $234.7 $218.6 7.4% $454.3 $ 430.3 5.6%
Insurance premiums and
contract charges earned (A) $161.4 $154.3 4.6% $319.7 $ 309.9 3.2%
Net investment income 45.6 50.3 -9.3% 93.1 100.0 -6.9%
Realized investment gains (losses) 2.2 (41.3) (2.5) (38.7)
Total revenues 209.2 163.3 28.1% 410.3 371.2 10.5%
Benefits, claims and settlement expenses 129.3 114.5 240.2 225.3
Interest credited 25.5 24.5 50.9 48.6
Policy acquisition expenses amortized 16.5 14.3 33.6 28.9
Operating expenses 33.0 31.6 4.4% 66.6 64.0 4.1%
Amortization of intangible assets 0.9 1.4 2.5 2.7
Interest expense 1.5 2.3 3.1 4.4
Debt retirement costs - 2.3 - 2.3
Litigation charges - 1.6 - 1.6
Total benefits, losses and expenses 206.7 192.5 7.4% 396.9 377.8 5.1%
Income (loss) before income taxes 2.5 (29.2) 13.4 (6.6)
Income tax expense (benefit) 0.4 (10.8) 3.2 (3.8)
Net income (loss) $ 2.1 ($18.4) $ 10.2 ($2.8)
(A) Effective December 31, 2001, Horace Mann ceased writing automobile
insurance policies in Massachusetts. See footnote (A) on page 3 for
quantification.
-2-
HORACE MANN EDUCATORS CORPORATION
Supplemental GAAP Consolidated Data
(Dollars in Millions)
Quarter Ended Six Months Ended
June 30, June 30,
-------------------- --------------------
2003 2002 % Change 2003 2002 % Change
---- ---- -------- ---- ---- --------
Analysis of Premiums Written
and Contract Deposits
- ----------------------------
Automobile and property (voluntary) (A) $136.5 $127.4 7.1% $265.0 $246.3 7.6%
Annuity deposits 70.0 65.1 7.5% 134.3 128.4 4.6%
Life insurance 28.0 27.3 2.6% 54.7 55.0 -0.5%
Subtotal - core lines 234.5 219.8 6.7% 454.0 429.7 5.7%
Involuntary and other property & casualty (A) 0.2 (1.2) 0.3 0.6
Total (A) 234.7 218.6 7.4% 454.3 430.3 5.6%
Total, excluding Massachusetts automobile (A) 234.7 218.8 7.3% 454.3 429.1 5.9%
Analysis of Net Income (Loss)
- -----------------------------
Property & Casualty
Before catastrophes $ 2.8 $ 6.0 -53.3% $ 10.8 $ 13.3 -18.8%
Catastrophe losses, after tax (7.3) (2.7) (8.7) (2.8)
Total Property & Casualty (4.5) 3.3 2.1 10.5 -80.0%
Annuity 3.5 4.5 -22.2% 5.8 9.2 -37.0%
Life 3.7 5.3 -30.2% 7.5 9.1 -17.6%
Corporate and other (B) (0.6) (31.5) (5.2) (31.6)
Net income (loss) 2.1 (18.4) 10.2 (2.8)
(A) Effective December 31, 2001, Horace Mann ceased writing automobile
insurance policies in Massachusetts. This business represented the
following amounts for the periods indicated:
Premiums written
Voluntary automobile and core lines - - - -
Total - ($0.2) - $ 1.2
Premiums earned
Voluntary automobile and core lines - 3.2 - 7.4
Total - 4.8 $ 0.2 11.0
Policies in force (in thousands)
Voluntary automobile - 12
(B) The Corporate and Other segment includes interest expense on debt and the
impact of realized investment gains and losses and other reconciling items
to net income (loss). The Company does not allocate the impact of corporate
level transactions to the insurance segments consistent with management's
evaluation of the results of those segments. See detail for this segment on
page 5.
-3-
HORACE MANN EDUCATORS CORPORATION
Supplemental Business Segment Overview
(Dollars in Millions)
Quarter Ended Six Months Ended
June 30, June 30,
--------------------- ------------------
2003 2002 % Change 2003 2002 % Change
---- ---- -------- ---- ---- --------
Property & Casualty
- -------------------
Premiums written (A) $136.7 $126.2 8.3% $265.3 $246.9 7.5%
Premiums earned (A) 133.8 128.6 4.0% 265.4 256.6 3.4%
Net investment income 7.8 8.8 -11.4% 16.0 18.4 -13.0%
Losses and loss adjustment expenses 118.2 104.5 217.5 204.5
Operating expenses (includes policy
acquisition expenses amortized) 30.8 29.2 62.6 57.2
Income (loss) before tax (7.4) 3.7 1.3 13.3
Net income (loss) (4.5) 3.3 2.1 10.5 -80.0%
Net investment income, after tax 6.4 6.7 -4.5% 13.0 13.9 -6.5%
Catastrophe losses, after tax 7.3 2.7 8.7 2.8
Statutory operating statistics (B):
Loss and loss adjustment expense ratio 87.8% 82.9% 81.6% 80.5%
Expense ratio 22.9% 24.1% 23.6% 23.2%
Combined ratio 110.7% 107.0% 105.2% 103.7%
Impact of litigation charges (C) - 1.2% - 0.6%
Combined ratio before catastrophes 102.3% 103.8% 100.2% 102.0%
Automobile and property detail:
Premiums written (voluntary) (A) $136.5 $127.4 7.1% $265.0 $246.3 7.6%
Automobile (A) 97.7 91.8 6.4% 196.3 184.5 6.4%
Property 38.8 35.6 9.0% 68.7 61.8 11.2%
Premiums earned, including Massachusetts (voluntary) (A) 131.8 125.7 4.9% 261.2 250.2 4.4%
Premiums earned, excluding Massachusetts (voluntary) (A) 131.8 122.5 7.6% 261.2 242.8 7.6%
Automobile, excluding Massachusetts (A) 96.8 90.6 6.8% 192.0 179.9 6.7%
Automobile, including Massachusetts (A) 96.8 93.8 3.2% 192.0 187.3 2.5%
Property 35.0 31.9 9.7% 69.2 62.9 10.0%
Policies in force (voluntary) (in thousands) (A) 852 873 -2.4%
Automobile, excluding Massachusetts (A) 572 574 -0.3%
Automobile, including Massachusetts (A) 572 586 -2.4%
Property 280 287 -2.4%
Voluntary automobile statutory operating statistics (B):
Loss and loss adjustment expense ratio 81.8% 82.1% 78.9% 78.8%
Expense ratio 23.1% 24.4% 23.2% 23.1%
Combined ratio 104.9% 106.5% 102.1% 101.9%
Impact of litigation charges (C) - 1.7% - 0.9%
Combined ratio before catastrophes 102.0% 105.2% 100.5% 101.1%
Total property statutory operating statistics (B):
Loss and loss adjustment expense ratio 105.5% 84.6% 90.0% 81.6%
Expense ratio 20.8% 20.4% 23.2% 21.5%
Combined ratio 126.3% 105.0% 113.2% 103.1%
Combined ratio before catastrophes 101.7% 95.8% 97.9% 98.5%
Prior years' reserves favorable (adverse)
development, pretax
Voluntary automobile (C) ($10.2) ($1.9) ($15.8) ($1.4)
Total property 0.7 (0.1) 1.1 -
Other property and casualty (0.4) (0.4) 0.5 (1.1)
Total (C) (9.9) (2.4) (14.2) (2.5)
(A) Effective December 31, 2001, Horace Mann ceased writing automobile insurance
policies in Massachusetts. See footnote (A) on page 3 for quantification.
(B) Also see footnote (B) on page 1.
(C) Includes a $1.6 million pretax charge for class action litigation for the
three and six months ended June 30, 2002.
-4-
HORACE MANN EDUCATORS CORPORATION
Supplemental Business Segment Overview
(Dollars in Millions)
Quarter Ended Six Months Ended
June 30, June 30,
------------------- ---------------------
2003 2002 % Change 2003 2002 % Change
---- ---- -------- ---- ---- --------
Annuity
- -------
Contract deposits $70.0 $ 65.1 7.5% $ 134.3 $ 128.4 4.6%
Variable 29.5 33.6 -12.2% 53.7 62.1 -13.5%
Fixed 40.5 31.5 28.6% 80.6 66.3 21.6%
Contract charges earned 3.5 3.7 -5.4% 6.7 7.4 -9.5%
Net investment income 25.6 27.4 -6.6% 52.1 54.8 -4.9%
Net interest margin
(without realized gains) 8.0 10.8 16.8 21.3
Net margin (includes fees and
contract charges earned) 12.0 15.0 -20.0% 24.4 29.8 -18.1%
Mortality gain (loss) and other reserve changes - (0.5) (0.5) (0.6)
Operating expenses (includes policy
acquisition expenses amortized) 6.2 6.6 13.6 13.2
Income before tax and amortization of
intangible assets 5.8 7.9 -26.6% 10.3 16.0 -35.6%
Amortization of intangible assets 0.5 0.9 1.7 1.8
Income before tax 5.3 7.0 8.6 14.2
Net income 3.5 4.5 -22.2% 5.8 9.2 -37.0%
Annuity contracts in force (in thousands) 149 144 3.5%
Accumulated value on deposit $2,544.5 $2,381.7 6.8%
Variable 973.6 952.7 2.2%
Fixed 1,570.9 1,429.0 9.9%
Annuity accumulated value retention - 12 months
Variable accumulations 92.0% 92.8%
Fixed accumulations 94.5% 94.0%
Life
- ----
Premiums and contract deposits $28.0 $ 27.3 2.6% $ 54.7 $ 55.0 -0.5%
Premiums and contract
charges earned 24.1 22.0 9.5% 47.6 45.9 3.7%
Net investment income 12.5 14.2 -12.0% 25.5 27.2 -6.3%
Income before tax 5.7 8.2 11.6 14.2
Net income 3.7 5.3 -30.2% 7.5 9.1 -17.6%
Life policies in force (in thousands) 263 273 -3.7%
Life insurance in force (in millions) $ 13,253 $ 13,441 -1.4%
Lapse ratio - 12 months
(Ordinary life insurance) 8.6% 9.2%
Corporate and Other (A)
- -----------------------
Components of loss before tax:
Realized investment gains (losses) $ 2.2 ($41.3) ($2.5) ($38.7)
Debt retirement costs - (2.3) - (2.3)
Litigation charges - (1.6) - (1.6)
Interest expense (1.5) (2.3) (3.1) (4.4)
Other operating expenses (1.8) (0.6) (2.5) (1.3)
Gain (loss) before tax (1.1) (48.1) (8.1) (48.3)
Net gain (loss) (0.6) (31.5) (5.2) (31.6)
(A) The Corporate and Other segment includes interest expense on debt and the
impact of realized investment gains and losses and other reconciling items
to net income (loss). The Company does not allocate the impact of corporate
level transactions to the insurance segments consistent with management's
evaluation of the results of those segments.
-5-
HORACE MANN EDUCATORS CORPORATION
Supplemental Business Segment Overview
(Dollars in Millions)
Quarter Ended Six Months Ended
June 30, June 30,
--------------------- --------------------
2003 2002 % Change 2003 2002 % Change
---- ---- -------- ---- ---- --------
Investments
- -----------
Annuity and Life
Fixed maturities, at market
(amortized cost 2003, $2,373.9; 2002, $2,142.2) $ 2,563.5 $ 2,161.3
Mortgage loans and real estate 4.7 5.0
Short-term investments 24.0 45.5
Short-term investments, securities lending collateral 392.9 439.8
Policy loans and other 72.3 66.6
--------- --------
Total Annuity and Life investments 3,057.4 2,718.2 12.5%
Property & Casualty
Fixed maturities, at market
(amortized cost 2003, $588.9; 2002, $544.1) 629.1 553.2
Short-term investments 2.8 11.8
Short-term investments, securities lending collateral 2.9 8.3
Other 1.7 0.3
--------- --------
Total Property & Casualty investments 636.5 573.6 11.0%
Corporate investments 5.1 38.0
Total investments 3,699.0 3,329.8 11.1%
Net investment income
Before tax $45.6 $ 50.3 -9.3% $ 93.1 $ 100.0 -6.9%
After tax 30.9 33.7 -8.3% 63.1 66.9 -5.7%
Realized investment gains (losses) by
investment portfolio included in
Corporate & Other segment income
Property & Casualty ($0.2) ($12.3) ($1.5) ($11.2)
Annuity 1.8 (16.0) 1.4 (17.2)
Life 0.6 (12.6) (2.4) (9.9)
Corporate and Other - (0.4) - (0.4)
Total, before tax 2.2 (41.3) (2.5) (38.7)
Total, after tax 1.5 (26.9) (1.6) (25.2)
Per share, diluted $0.03 ($0.65) ($0.04) ($0.61)
Other Information
- -----------------
End of period goodwill asset $ 47.4 $ 47.4
End of period property and casualty net reserves as of:
June 30, 2003 $ 285.4
March 31, 2003 275.7
December 31, 2002 272.6
Septmeber 30, 2002 273.2
June 30, 2002 273.5
March 31, 2002 270.5
December 31, 2001 272.0
September 30, 2001 274.6
June 30, 2001 271.6
March 31, 2001 248.6
December 31, 2000 249.8
September 30, 2000 226.9
June 30, 2000 228.8
March 31, 2000 225.3
December 31, 1999 235.4
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