Exhibit 99.2
[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 FIRST QUARTER
SPRINGFIELD, Ill., May 5, 2004 -- Horace Mann Educators Corporation (NYSE:HMN)
today reported net income of $21.7 million (51 cents per share) for the three
months ended March 31, 2004, compared to net income of $8.1 million (19 cents
per share) for the same period in 2003. Included in current quarter net income
were net realized gains on securities of $5.3 million ($3.4 million after tax,
or 8 cents per share), compared to net realized losses of $4.7 million ($3.1
million after tax, or 7 cents per share) for the same period a year earlier. All
per-share amounts are stated on a diluted basis.
"Horace Mann had a strong first quarter," said Louis G. Lower II, President and
Chief Executive Officer. "We are particularly encouraged by the improvement in
the earnings of our property and casualty segment, which was driven by favorable
non-catastrophe frequency trends for automobile and property claims and a
relatively low level of catastrophe losses, along with no adverse development of
prior years' reserves."
"Similar to much of the industry, Horace Mann benefited in the quarter from
favorable weather and underlying frequency trends. However, our property and
casualty combined ratio improvement was also the result of aggressive
underwriting and pricing actions taken over the last several quarters, continued
improvements in claims processes and procedures, and the positive effect of cost
containment initiatives on both claims and underwriting expenses," Lower added.
Net income for the property and casualty segment improved $6.5 million compared
to a year earlier due primarily to the factors cited above. Net income for the
annuity segment increased $1.6 million compared to the first quarter of 2003,
driven by growth in contract fees and favorable adjustments from the March 31,
2004 valuations of the value of acquired insurance in force, deferred policy
acquisition costs and guaranteed minimum death benefit reserves compared to
unfavorable adjustments from similar valuations a year earlier. Life segment net
income decreased $0.7 million compared to the first quarter of 2003 due
primarily to a decline in group insurance earnings, lower investment income and
valuation of deferred policy acquisition costs.
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The company's premiums written and contract deposits increased 11 percent
compared to the prior year, reflecting significant growth in new annuity
deposits and rate increases in the property and automobile lines. While life
segment insurance premiums and contract deposits decreased slightly compared to
the first quarter of 2003, total life annualized new sales, including partner
products, increased 16 percent.
New annuity deposits in the first quarter increased 31 percent over the prior
year due to growth in new single premium and rollover deposits. In addition, the
12-month retention ratio for fixed and variable accumulated annuity deposits
improved to approximately 95 and 93 percent, respectively.
Total new annuity sales increased 77 percent compared to the first quarter of
2003, including growth of 35 percent in new sales by Horace Mann agents. Annuity
production from independent agents was comparable to the fourth quarter of 2003
and seven times the level produced in the first quarter of 2003. "We plan to
continue leveraging the independent agent channel as a key source for growth in
our annuity business, but with greater emphasis on variable deposits to improve
overall returns in today's low interest rate environment," Lower commented.
Horace Mann's career agency force totaled 830 agents at March 31, 2004. "While
the total number of agents declined compared to a year ago, the number of
experienced agents held steady, average agent productivity increased more than
20 percent compared to the first quarter of 2003, and annualized new sales by
the career agency force increased 17 percent," Lower said.
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.
# # #
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HORACE MANN EDUCATORS CORPORATION
Digest of Earnings and Highlights
(Dollars in Millions, Except Per Share Data)
Three Months Ended
March 31,
------------------
2004 2003 % Change
---- ---- --------
DIGEST OF EARNINGS
Net income $21.7 $ 8.1 167.9%
Net income per share:
Basic $0.51 $0.19 168.4%
Diluted $0.51 $0.19 168.4%
Weighted average number of shares
and equivalent shares:
Basic 42.7 42.7
Diluted 42.9 42.9
HIGHLIGHTS
Operations
Insurance premiums written and
contract deposits $244.8 $219.6 11.5%
Return on equity (A) 5.9% 0.8%
Property & Casualty GAAP combined ratio 93.5% 99.5%
Property & Casualty GAAP combined
ratio before catastrophes 92.6% 97.9%
Experienced agents 496 497 -0.2%
Financed agents 334 387 -13.7%
Total agents 830 884 -6.1%
Additional Per Share Information
Dividends paid $0.105 $0.105 -
Book value (B) $13.50 $12.73 6.0%
Financial Position
Total assets $5,519.0 $4,907.8 12.5%
Short-term debt 25.0 -
Long-term debt 144.7 144.7
Total shareholders' equity 576.5 543.5 6.1%
(A) Based on 12-month net income and average quarter-end shareholders'
equity.
(B) Before the market value adjustment for investments, book value per
share was $10.91 at March 31, 2004 and $10.59 at March 31, 2003.
Ending shares outstanding were 42,722,701 at March 31, 2004,
42,721,940 at December 31, 2003 and 42,701,528 at March 31, 2003.
1
HORACE MANN EDUCATORS CORPORATION
Statements of Operations and Supplemental GAAP Consolidated Data
(Dollars in Millions)
Three Months Ended
March 31,
-------------------
2004 2003 % Change
---- ---- --------
STATEMENTS OF OPERATIONS
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Insurance premiums written and contract deposits $ 244.8 $ 219.6 11.5%
Insurance premiums and contract charges earned $ 167.6 $ 158.3 5.9%
Net investment income 48.6 47.5 2.3%
Realized investment gains (losses) 5.3 (4.7)
Total revenues 221.5 201.1 10.1%
Benefits, claims and settlement expenses 111.5 110.9
Interest credited 26.4 25.4
Policy acquisition expenses amortized 16.4 17.1
Operating expenses 33.6 33.6 -
Amortization of intangible assets 1.3 1.6
Interest expense 1.7 1.6
Total benefits, losses and expenses 190.9 190.2 0.4%
Income before income taxes 30.6 10.9 180.7%
Income tax expense 8.9 2.8
Net income $ 21.7 $ 8.1 167.9%
ANALYSIS OF PREMIUMS WRITTEN
AND CONTRACT DEPOSITS
- ----------------------------
Property & Casualty
Automobile and property (voluntary) $ 134.0 $ 128.5 4.3%
Involuntary and other property & casualty 0.7 0.1
Total Property & Casualty 134.7 128.6 4.7%
Annuity deposits 84.2 64.3 30.9%
Life 25.9 26.7 -3.0%
Total $ 244.8 $ 219.6 11.5%
ANALYSIS OF NET INCOME
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Property & Casualty
Before catastrophes $ 13.9 $ 8.0 73.8%
Catastrophe losses, after tax (0.8) (1.4)
Total Property & Casualty 13.1 6.6 98.5%
Annuity 3.9 2.3 69.6%
Life 3.1 3.8 -18.4%
Corporate and other (A) 1.6 (4.6)
Net income 21.7 8.1 167.9%
(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. 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 4.
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HORACE MANN EDUCATORS CORPORATION
Supplemental Business Segment Overview
(Dollars in Millions)
Three Months Ended
March 31,
--------------------
2004 2003 % Change
---- ---- --------
PROPERTY & CASUALTY
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Premiums written $ 134.7 $ 128.6 4.7%
Premiums earned 139.6 131.6 6.1%
Net investment income 8.8 8.2 7.3%
Losses and loss adjustment expenses 99.6 99.3
Operating expenses (includes policy
acquisition expenses amortized) 31.3 31.8 -1.6%
Income before tax 17.5 8.7
Net income 13.1 6.6 98.5%
Net investment income, after tax 7.3 6.6 10.6%
Catastrophe losses, after tax 0.8 1.4
GAAP operating statistics:
Loss and loss adjustment expense ratio 71.3% 75.5%
Expense ratio 22.2% 24.0%
Combined ratio 93.5% 99.5%
Combined ratio before catastrophes 92.6% 97.9%
Automobile and property detail:
Premiums written (voluntary) $ 134.0 $ 128.5 4.3%
Automobile 102.3 98.6 3.8%
Property 31.7 29.9 6.0%
Premiums earned (voluntary) $ 137.5 $ 129.4 6.3%
Automobile 100.2 95.2 5.3%
Property 37.3 34.2 9.1%
Policies in force (voluntary) (in thousands) 843 852 -1.1%
Automobile 565 571 -1.1%
Property 278 281 -1.1%
Voluntary automobile GAAP operating statistics:
Loss and loss adjustment expense ratio 73.4% 76.3%
Expense ratio 22.0% 23.3%
Combined ratio 95.4% 99.6%
Combined ratio before catastrophes 95.3% 99.4%
Total property GAAP operating statistics:
Loss and loss adjustment expense ratio 60.0% 74.1%
Expense ratio 22.4% 26.0%
Combined ratio 82.4% 100.1%
Combined ratio before catastrophes 79.4% 94.4%
Prior years' reserves favorable (adverse)
development, pretax
Voluntary automobile $ - $ (5.6)
Total property - 0.4
Other property and casualty - 0.9
Total - (4.3)
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HORACE MANN EDUCATORS CORPORATION
Supplemental Business Segment Overview
(Dollars in Millions)
Three Months Ended
March 31,
-------------------
2004 2003 % Change
---- ---- --------
ANNUITY
Contract deposits $ 84.2 $ 64.3 30.9%
Variable 31.2 24.2 28.9%
Fixed 53.0 40.1 32.2%
Contract charges earned 4.2 3.2 31.3%
Net investment income 27.4 26.5 3.4%
Net interest margin (without realized gains) 9.1 8.8 3.4%
Net margin (includes fees and
contract charges earned) 13.8 12.4 11.3%
Mortality gain (loss) and other reserve changes (0.1) (0.5)
Operating expenses (includes policy
acquisition expenses amortized) 7.0 7.4 -5.4%
Income before tax and amortization of
intangible assets 6.7 4.5 48.9%
Amortization of intangible assets 0.9 1.2
Income before tax 5.8 3.3
Net income 3.9 2.3 69.6%
Pretax income increase (decrease) due to valuation of:
Deferred policy acquisition costs $ 0.4 $ (0.7)
Value of acquired insurance in force - (0.3)
Guaranteed minimum death benefit reserve 0.1 (0.2)
Annuity contracts in force (in thousands) 154 148 4.1%
Accumulated value on deposit $ 2,831.5 $ 2,399.4 18.0%
Variable 1,137.5 859.3 32.4%
Fixed 1,694.0 1,540.1 10.0%
Annuity accumulated value retention - 12 months
Variable accumulations 92.9% 91.9%
Fixed accumulations 95.2% 94.2%
LIFE
Premiums and contract deposits $ 25.9 $ 26.7 -3.0%
Premiums and contract charges earned 23.8 23.5 1.3%
Net investment income 12.7 13.0 -2.3%
Income before tax 4.8 5.9
Net income 3.1 3.8 -18.4%
Pretax income increase (decrease) due to valuation of:
Deferred policy acquisition costs $ (0.1) $ 0.2
Life policies in force (in thousands) 256 267 -4.1%
Life insurance in force (in millions) $ 13,272 $ 13,259 0.1%
Lapse ratio - 12 months
(Ordinary life insurance) 7.2% 9.1%
CORPORATE AND OTHER (A)
Components of gain (loss) before tax:
Realized investment gains (losses) $ 5.3 $ (4.7)
Interest expense (1.7) (1.6)
Other operating expenses (1.1) (0.7)
Gain (loss) before tax 2.5 (7.0)
Net gain (loss) 1.6 (4.6)
(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. 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.
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HORACE MANN EDUCATORS CORPORATION
Supplemental Business Segment Overview
(Dollars in Millions)
Three Months Ended
March 31,
--------------------
2004 2003 % Change
---- ---- --------
INVESTMENTS
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Annuity and Life
Fixed maturities, at market (amortized
cost 2004, $2,522.6; 2003, $2,352.0) $ 2,682.1 $ 2,475.0
Short-term investments 59.4 31.9
Short-term investments, securities
lending collateral 385.9 370.1
Policy loans and other 79.8 74.7
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Total Annuity and Life investments 3,207.2 2,951.7 8.7%
Property & Casualty
Fixed maturities, at market (amortized
cost 2004, $634.5; 2003, $570.4) 656.8 597.5
Short-term investments 41.1 11.4
Short-term investments, securities
lending collateral 0.9 4.4
Other 0.7 0.7
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Total Property & Casualty investments 699.5 614.0 13.9%
Corporate investments 0.6 0.8
Total investments 3,907.3 3,566.5 9.6%
Net investment income
Before tax $ 48.6 $ 47.5 2.3%
After tax 33.2 32.2 3.1%
Realized investment gains (losses) by
investment portfolio included in
Corporate and Other segment income
Property & Casualty $ 2.3 $ (1.3)
Annuity 2.1 (0.4)
Life 0.9 (3.0)
Corporate and Other - -
Total, before tax 5.3 (4.7)
Total, after tax 3.4 (3.1)
Per share, diluted $ 0.08 $ (0.07)
OTHER INFORMATION
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End of period goodwill asset $ 47.4 $ 47.4
Property and casualty net reserves as of:
March 31, 2004 $ 326.9
December 31, 2003 320.9
September 30, 2003 308.0
June 30, 2003 285.4
March 31, 2003 275.7
December 31, 2002 272.6
December 31, 2001 272.0
December 31, 2000 249.8
December 31, 1999 235.4
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