HMN - Earnings call transcript Q4 2020 | Horace Mann Educators Corporation

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Operator

Good morning and welcome to the Horace Mann Educators Fourth Quarter and Year-end 2020 Investor's Call. All participants will be in listen-only mode [Operator Instructions] After today's presentation, there will be an opportunity to ask questions. Please note, this event is being recorded. I'd now like to turn the conference over to Heather Wietzel, Vice President of IR. Please go ahead.

Heather Wietzel

morning, good and you, everyone. Thank Mann's Welcome and our year of quarter to results. Horace fourth full discussion Yesterday, our we supplement. issued earnings release investor and are which Investor with the available our Copies along website page our posted was of presentation, this morning. investor on Officer, Chief President Financial give President will Conklin, remarks formal Chief Bret Executive Zuraitis, Executive and Marita on Officer the and Vice and today's call. Wade and on Q&A, we Distribution; Greenier on P&C; on Life Investments. have Mark Weckenbrock Mike Retirement; Sharpe the Rugenstein Matt for Supplemental; us Ryan With on and on Desrochers

it no in measures over SEC forward-looking are our any Securities available turn obligation that The over a turning guarantees not are in statements to use news Before Actual most factors, XXXX. to to Marita, performance. to investors our and management's them. remarks, these on prepared based measures. of Private which note presentation as forward-looking and of future I statements that current Litigation the statements some GAAP forward-looking Marita. measures of expectations, cautions may want comparable Reform include now Act news the in due today release. materially we non-GAAP our the Reconciliations These results differ to we I'll In our risks update of includes are to company call uncertainties defined assume release described variety are filings. and and

Marita Zuraitis

thrived quarter return over X.X% $X.XX were $X.XX difficult core of alone XXXX. full-year Thanks annual Heather. than prior our share, higher In core XXXX, XX.X%, events, fact up facing our underscores that our the customers, from and not to of only XX% of sustained fourth in rate help in the highest more and contributed significant was core dedication Last in today but diluted our Core COVID-XX, the of Good importance This educators of employees low earnings strategies, XXXX we tomorrow. survived, and ever. equity earnings company to they reported year prepare successful Horace mission the of on a per solutions and a everyone. challenges. Mann's diluted what have we we interest protect to support environment, not than agents year. this record share, morning, and per for a catastrophe night, a increase and the number strength environment. earnings The prior provide

the years including relationships business our making We product enhancing strong the were Because infrastructure. We the integration of the of our serve issues our of understand our been that of on by XXXX able have we segment. we tangible in successful transactions has progress our are modernizing because stay integration seeing market and multiyear strides better Mann around toward are foundation, make Horace we for accelerating this benefits offerings, to solutions. Supplemental strategic provide to our major XX and to facing, the and a education centered is plan with strengthening key full community. the educators distribution, use mission focused education

the with tandem changing in evolves educational model business Our environment.

as already reshape certainly environments, new address flexible pandemic year To established them And working for combination fall alike. are we a virtual for November address at of stable ago. are even while learning in for same their enough structure finances. Educators overwhelmingly a they best said Students with XX% XXXX families to time, this time Horace with little to of was are survey, working practices more. educators our Mann and research prepare a changes the At in for lean hours on students, their mean behind. may health and will global needs further year So balance concerns predicted educators putting that educators a particularly couldn't the in-person year, own these is to students behind tough without and academically. difficult function than a are worried more that or school to a educators, schools almost the environment, try arise. would for have fall reality concerns, districts disadvantage, home in way they

or COVID-XX. that employer our had concerns them issue. into relative new November benefits Mann Although are professionally savings more and study, XXXX, financial to on educators health told environment. personally work non-retirement Horace have XX% off of these less during both promise to feeling would job In their that a professions delivering have to unplanned some And other put educators pandemic, XX% the supporting and the due collectively educators families stopped in their confident security in In paying the for addressing they only cover this were time and impact.

work for As our together like programs adoption the accelerated seminars online. technology to transitioning it we COVID-XX included schools using a technology the teaching. utilizing in across to of educators This educators pandemic the financial easier many and webinar that began country spring, the for agents closing are format, wellness solutions made same

with to additional We providers educators curriculum get also partnered resources. remote learning

shared proactively communities, supported educators, also time, at and the our as outside pandemic-related classrooms. faced employees we As of challenges they we

In topics XXXX audience. on every put in million helped presenting nationally-known public we speaker Recently, public $XXX our help the the educators In resources educators series along deserve, helps next program, speakers specifically loan loan loan forgiveness. we nationwide. debt out on educator receive accounts. to alone, launched provide curated for through they addition, an solutions loan student we of a student virtual rolled to service free student educator these the for accounts school online other forgiveness to We manage featuring with path generation for which

a session leadership. the Principals financial Some Adam of TODAY were Welcome a on fellow the like designed session Jean with while educate, Association in inspire, for for like were of to to meant events Chatzky Elementary security center National others show, with the innovative School

reflects Fire also on continued core progress that This policyholder in including of XXXX, XXXX our included complement in essentially us may in valuable pursued million $X.X and due In the these will long-term record. in and been typical tested our guidance, a earnings guiding later initiatives keeps activities. to in-person post-vaccine will range call, core XXXX share well and in several our in return subrogation corporate pandemic. recovery, XXXX. XXXX, the and the been worked not items one-third to outlook original COVID-XX, We that virtual approaches down the lot our be a the of a to range not X.X%. a lower we more that over track of to would tools to the will number events simply, have and virtual XXXX learned Put in results the performance about sustainable Bret expenses a behavior drove goal ones our $X.XX new we that on to on $X.XX due EPS per tracking added environment, year. are playbook details ROE. It company, forward. of initiatives improvement a in-school but break integrated changes going a of of X% our in reflects As that will be strategic Camp repeat the which strategic equity have effect The double-digit with to itself of to and

year. see during We first the will momentum but pre-vaccine and in and to the later part to live expect of returning continue work largely environment XXXX, a

strategic on leveraging ourselves enhancements We several for are made over to focused growth. years we've optimally past the the position

segmentation offers Guidewire For our prospects system our the in have example, for we leverage implement states The customer strongest rollout to plan in structure. growth. the administration to in system substantial P&C new ability where into pricing we insights benefits

addition, school more educators. fill accelerating customers. to the agents territories, auto, district our life, entire agency agents officials and and and their aligns of during In These retirement of now able with were have well with the uncovered agents to products our we it successful by working experienced Supplemental importantly, force ahead opportunity Even integration original provide schedule. XXXX, property, to

supplemental in the also benefit platform Section environment. different An the growth. benefits voluntary a recently expenses. to offerings for their Mann for existing insurance are Section of enrollment districts provide we to XXX platform technology for such migrating products, School medical potential Horace enter retirement and or to districts XXX to XXX currently We to as post-pandemic expect We in alignment this employees our Section use can benefits from school upgrade savings, as the provides types platform district, platform. moved unified pretax withholdings new

migration strong relationship we part number already are of retirement process, in making As products. and of a available have the where other supplemental districts a providing products we our

are Additionally, they to to test with social the marketing. to we the integrate by provided to as direct distribution of foundation of strong serve customer inside educators, and communication and Mann other sales, This strives the with develop agency possible. making leverage meeting web, and do goal the where including with force easy omnichannel Horace approach media, channels business as and and continue

the Before is want call to commitment topic as on equity, to another just to who that I touch I turn company; we our take inclusion. to to as a integral diversity, Bret, over a are and moment

a efforts, recognizing, that, to improvement. we continues we enhance an Like culture to we We how establishing including for work assessing the great improving of our diverse place operates. been initiatives employee inclusive diversity, Council number haven't has help so are but respecting, XXXX, educators inclusion Mann In company and took Horace are always be to to to that guide dedicated and continually called all. differences always a areas serve, and and it identify of appreciating group, a we and steps our equity, company our DEI for part a

a strategic policies, believe respected, brand. firmly roll Gender-Equality I all reporting to I'm starting ways, Mann's worldwide to parity, that, with inclusive culture, Mann five the and of an I'll to pipeline, plan to the important Directors, included women's company's training began measures companies was in equal transparency members. appreciated, Board that XXX where to gender report the which Index, corporate gender to and Bret. across in Horace is we year Thank pleased pay offering and in out recognizes for third of reference equality are many an over DEI Mann XXXX in unconscious been the female valued thought Bloomberg leadership diversity be continues the Horace continued harassment talent which bias are advance equality. leaders, individual and And Horace gender fronts. one senior named inclusive commitment year and call you. pay that index, our sexual differences work pillars; factor all turn for we commitment to Only recognized, the on addition, and In has staff, company and to in with row, a to Council pro-women advancing success. environment, highly remarkable and

Bret Conklin

and Thanks, morning, good Marita, everyone.

year. of $X.XX. two-thirds XXXX last in remaining such and over As as fourth recovery. Marita essentially of initiatives XX% improvement quarter compared the $X.XX EPS last estimate to guidance $X.XX other the ahead core to strategic up original with Camp noted, put EPS largely repeat, XXXX. $X.XX of and guidance our of pandemic further of drove core about our the us was original The Full-year one-third That to factors We tracking we subrogation won't up quarter related range was XX% ahead with well attributable over even XXXX, guidance. the was improvement our that Fire offered

presumes The to returning the then as effects infrastructure pandemic the see and and later as performance Horace EPS expansion. and double-digit I'll support of to $X.XX expect another on our $X.XX from reinforces beyond year XXXX going sales of Mann. product, market each will that Our that outlook up the we lingering holds year, long-term another to right dive towards progress for of progress initiatives on recovery well segment, we I'm year what and XXXX sustainable into share finish see range the guidance to ROEs. distribution, in for the of guidance

and reinstatement X% Property the were Casualty, the lower remained reported were ratio. up sales earnings million credits stable Premiums reflecting premium quarter the year offset PG&E Policyholder stable of retention well. down XX.X% improvement core year, $XX.X with new the second than and for more as For the for pandemic-related about related combined as a QX. in in year the subrogation to X.X-point for premiums the recovery rates in generally the in return the

moves $XX.X added full-year pre-pandemic been industry the our level, we driving into rolled context, It recovery catastrophe We combined quarter. load losses development compared have XXXX the quarter, ratio post-vaccine loss full are Looking market third year in these the underwriting starting the favorable the we points impact we and in quarter a to a was for year catastrophe out for year's of year, losses to X.X XX solidly as half P&C the $X.X into account for $X actuaries' very remain progress Most pretax incorporated year. pressured new favorable X.X%. than million the the closer changes property significantly catastrophes fourth of ended independent environment. in because the years. income and the quarter, took with country In XX.X the improved was a were investment events COVID-XX strong which from P&C's will costs contributing above limited last ratio the auto prior fourth while ex-cat We in at reflect to and across XXXX. the the higher vaccines pandemic. return last implied in million in losses, a period, combined the primarily affected was total to combined net underlying with being expect up reserves. returns. the share the P&C the included patterns XX XXXX The catastrophe Briefly, we reserve XXXX, the of loss XX levels Underwriting the country PCS assumption X.X% sales recovery recorded Camp subrogation continue which in sales for million, for upper the ratio. as fourth the past factors ratio Putting number points Offsetting into reserves. over loss activity partnership in year, to the income with saw despite reflecting to the policyholders. million line experienced our a of catastrophe our record the due that range loss has points loss XXXX, average in improved catastrophe board Fire catastrophe our increase was reinsurance other $XX.X across guidance. favorable X.X% income better in

see made The our to impact uptick profitability. as new benefits improve our also the years We UM/UIM on well cost several progress enhance to continue offset to related loss driving reflects because a frequency anticipated over model the and in patterns lower we've as claims. from of pricing segmentation partial of the long-term pandemic the

In fewer small addition, we're claims. receiving

levels. Over long-term loss of anticipate we the course gradually ratios our XXXX, rising toward target

rates severity by factors permanent, the would but some be anticipate to driving in stable presuming changes We in patterns XXXX. are We become of those XXXX. offset some that increased fairly

In year, loss the addition, the X.X underlying reinsurance return improved the quarter. third ratio the property of premium for points full primarily due in to reinstatement

normal by XXXX, Over fire losses concentration larger non-weather, geography, and by the as of we're course mix perils quarter. seeing analysis the reflected We're of fire our fourth patterns no to higher losses, continues costs. by including the in variations find agent, loss confident or four water, and

expected underlying with For rise XXXX, rates property to stable will we the the anticipate be in low-single digits. ratio loss

accruals. to year-end reduction initiatives combined XXXX quarter ratio benefiting by our to million made pandemic. The in line full-year ratio the from slight to longer-term the was with expense to P&C progress the supports with improved we've outlook as uptick normal point in the lower $XX spending half million our The due full-year the in fourth in well target expense for segment XX%. XX% a of earnings Finally, due fundamental ratio as $XX in

policyholder $XXX.X changes are million favorable remained both reserves its solid Horace $XX.X part the the in in to income and in They through the Net sold full enrollment first third Supplemental yield. of segment In on quarters. behavior improving because earnings, due and in of worksite Supplemental Supplemental. below year to sales Turning Mann, million and making COVID-XX. short-term Supplemental to year fourth the in core $X.X traditionally the trends across added portfolio a the last products the were as investment Supplemental industry. benefit million we well progress reflects have model been premiums investment reflecting

expect return in trajectory policies this about a coming Premium quarters. persistency rose the We to more begin to sales to force. normal in XX.X% environment, with over to XXX,XXX

business policyholder is As retention relatively stable. we've this for said,

of mid-XX%. pretax closer benefit to for the that core brought will outlook it $XX the million margin profit $XX longer-term to move target The segment continues Horace XXXX Supplemental's expectation Our full-year the of illustrate diversification to million our reflects earnings has Mann. to

process. in last indexed segment, in term universal was Life trends life to policy policies lapse The complex which such issued XXXX. below and very below levels. with Core to products interaction the and in consistent mortality earnings and saw in pre-pandemic as values complete line sales sales claims with the versus low, declined number single-premium of with slightly with the trends customer remains actuarial of were the of line life larger mortality year related COVID-XX the For quarter, fourth expectations recurring although levels, favorable ratio whole more although sales policies averaging were face we require that volume count reflected improved remains pre-pandemic The $XX,XXX.

our In ex-DAC, benefits expenses XXXX the million. X.X% expectations $XX.X as expense optimization XXXX. efforts, at the addition, from expenses core on due reflected declining were of as operating ongoing lower well pandemic with track earnings, to our

in million. deliver cover moment, in Life $XX I'll single-digit the XXXX, rise which range expectation alternative to returns XXXX expect to core the portfolio our supports million for earnings to a to As $XX we of mid-to-high

in the Those related full-year expenses over lower million improved Operating largely net to on annuity place the portfolio. retained expense ex year by margin savings interest Retirement last savings our For reflecting year. segment, million, $X.X put earnings, pandemic. the DAC last core declined and $X offset unlocking, were almost initiatives

the and in reflecting this quarter driven of investments year, bps limited threshold to for benefit the by Fourth net transaction the partnerships. However, strong reflected business. above our returns reinsurance the returns results is interest improved spread double-digit XXX for the

see We segment savings quarter. essentially fourth educators. in less retirement continue a deposits flat for the our up core single-premium than for X.X% year the in Annuity remain augmenting year's with as solutions to last Retirement and need contract slightly quarter for growth rollover were activity fourth

achieve to performance, way anticipate range will business, our to on portfolio customers XXXX, higher our are educator as $XX important ex-DAC continue Based alternative we by earnings, see to annuity their of million. unlocking, outlook in and Our for $XX our products. suite that we core our an be and see the will fees annuities fee-based next Retirement million they objectives year's on expectations financial of complemented

one Investments. investment managed was above for the on net for recovery the Total most $XXX.X improving equity to portfolio, lag which drive the in in Turning guidance market strong marks a was year. in income alternatives quarter our private and equity continued various This positive in growth funds. as investment portfolio recent quarter. XX.X% fourth income across generally million The reports market resulted on our to the net resulted valuations

to in remain the security below of continued though We allocate the in this for year's alternatives structured X% to in portfolio. that longer-term year. asset impacted our valuations return In this were even class, earlier addition, the was target recover confident funds to most continuing

maturity with ago. portfolio of volatility portfolio well The compared yield remains had any the core fixed X.XX% positioned downturns. fourth a induced core year quarter Our additional X.XX% to in economic COVID-XX weather market and a

for to reflected issuers. money net we million in new XXXX. included anticipate losses travel-related market year XXXX, full-year our in core year various basis, core of related $X.X conditions, losses on to For rate most proactive money On core we half on a on of fourth of sell responses $X.X pressure high-quality impairment million and municipals, second current COVID-related and the X.XX% corporate portfolio new energy Those securities. rate intent the the our decisions. about Based and X.XX% of purchases to The agency government the quarter. a was focused of throughout X% realized

guidance be For This million the core is outlook investment income to range XXXX, will of and segment captured investor reinsurance. we segment EPS of for $XXX expect summarized approximately total on on expectation deposit presentation million net between income our $XXX $X.XX million, in investment in and our by investment $X.XX. income in the $XXX asset including accreted

call to on the the the step most over today's Q&A, I XXXX on objective wanted steady, to what from years trajectory our reiterate believe several upward ROE. call, we've for Before is represent for been long-term significant Heather another I toward of the turn for we targets our past sustainable takeaway that double-digit

to translating use generation performance strong Our will shareholder the creation is value into time capital right. we that when is accelerate

returning conditions remain priorities at growing compelling annual Our environment, our back with a first: second, returns unusual the despite track ahead. shareholders the about turn shares Thank via to challenges lies we dividend, buying that or market of when meet finally, opportunistically portion exceed and right of Heather. and And earnings back I'll it on you. We're back our business are ROE significant warrant. that, excited this what targets to

Heather Wietzel

you, for Thank Operator, ready we're questions. Bret.

Operator

[Operator Securities. first from Instructions] question Carletti ahead. is Matt Please go JMP The from

Mat Carletti

it we past you help optimism your confidence And sense growth maybe but of what pieces - maybe a Understand grow. that and the then question terms you again? gives to put that as once was you've biggest Marita, kind while. you of the will in towards Obviously, for to conditions place normality. your so a PIF about what pre-pandemic may Horace getting bit growth. been I the and and Mann This be growth, the a is opening a that just that there pre-pandemic spoken clear, pandemic post-pandemic, more It a a post-pandemic there. working to the growth confidence pandemic in growing you on about be bigger were sense made I these about get challenges wanted about, back growth together pandemic the from and walk hasn't Can little of to picture? Bret's us ask returning that there to your pretty kind throughout focus comments from clear on and

Marita Zuraitis

of an we you Matt. transparent I your way answer I but thinking. our investor all while spent is and question the asking pretty putting it, a together lot time think includes presentation Thanks, sometimes you're Yes. love of that

underneath deck specifically as thought those eight before transformational you we phase, the that this grow in But for leverage already. in page us. environment. jumped had, before all be product difficult. take that that We We tries is ratio. Supplemental and the So the holes how stage, and for well knew is have, page in three to up that We maybe if about the if within our transaction look our assume about even portfolio, levers that going our to more in in minute, in you about position our we reality of the it investor we this know strengthening had that by pandemic a about others will know ex-XXXX, bandwagon, we will, really eight, strategic market lower six Street recruiting investor to originally And franchise. the that really it more tools if than laid during those think you go XXXX. XXXX than know the we economic six for we agents $XX forward. phase, for transaction, at through expenses. know and frankly phases it. to education also We going initiatives, that about we this. was a ROE you expanded the putting deck, distribution, those journey Having saved I 'XX occurred phase, of ultimately and you the we if quite Adding just education if the leadership the And you progress, what modernizing year, marketplace our assumed the segment, we onboarding could in strategic and right our being work longer. with the NTA if a really think were the who like to the mean, bringing look And the or capabilities talked at agents so PDI households, of about the BXB through loss space if improved we and wound will, do thought essential slide even thought about low 'XX, education XXXX, XXX,XXX of again phase back many to you feel transactions on exactly about all infrastructure, executed would reinsurance and that that was were in we doing our adding That the does addition what long, thought. work that you for what for and strategic go enough this phases be the but fix-and-build on I difficult. BCG, thought that for don't the in that worked with we because And gaps track addressing even that aside that, we brilliant market if phase, us, about that you how very and million back you were of really auto I it's almost we come proved way actually what would be. out we've do

the about midpoint So when midpoint at XX earned XX% XXXX, of XXX, what we of in I it increase XX% a from we that's I about non-reoccurring the benefit, earned without Take XXXX that, earnings. range back at think about ish. step the our call in XXXX range pandemic for what that's in another

I earnings at thinking into looking what go to you pretty to translates X an about go ROE. ROE pretty ROE, we a were X.X again close X.X that into page X.X, think good we trajectory told and that's that

we with what think I occurred and had to us step I the got say but and XXXX. in Yes, that numbers record earnings the benefits, camp we it, and non-reoccurring We behalf I We I about about fire choice. a below to got XXX. from of isn't going subrogation, think right we for of fire the we these non-reoccurring because but but for lot But our I unpacked had that thought that on without back XXXX of Now that I made was me of step things, us that think benefits COVID, subrogation. the again. the think that although of in earnings talk a all about our know I back when reinsurers, benefit about camp that renewals. positives, happen And got reinsurance pricing we on I financial record the market obviously because

to been something Obviously, So better more did non-reoccurring to as XXXX ways we it. increase come We we did pandemic serve and educators We year. did it I accelerated NPS behavior driving and the without in at did an and a maybe we when we do, of our us they different ever we we when skipping different prepared are so did is easy the still We through virtualized wasn't we actually there claims The that integration through a this XXXX, did but with thing out patterns supplemental that gradually beat. and in the scores which caps, that as and it We and we pandemic well. we being auto go frequency well. of environment that premium sales get done. it environment think I and our biggest connected had XXXX is will part of will come integrated look than up. educators, state-by-state-by-state, in XX process, never benefit that it went have. that in our think our helps agents We credit and the

anything internally the they it. we period, at we would to we would this of I out were the end we come could of work through time we come accelerate. what came thought then numbers really this And the do positioned the to are said we took way that So accelerate thing into better hard we through going and

got physical physicality all of then touches we you world, our that when more to come can clients, take top and we a add get back do we've I how of it, that's we with virtualization advantage when that built, that all and we those why and that we virtual sense excited about think So of. we on our think

come out plan strategy a through well a the we it came and laid financial would think way I exactly pretty that almost said through. transparent very

Matt Carletti

more the on that, kind great potential Can guidance? tagging comment income of to of it across if year. I'm In ask ROE. it gave any excess the share caught One That how assuming is But very quick hit I the about year. you One on Is ROE repurchases define the around importantly, you. Thank realized I assumption just of ROE. you of X, color built into walk it. you your fixed with kind is color ROE? The and there will. equity slide just across helpful. a capital considerations opportunistic and gains of Bret that average one, other for on that kind kind you

Bret Conklin

that you with absolutely Yes, so aware probably I you're ROE are at guidance correct capital being our should mention the XXX. our which well are ROEs to targeted levels, calculated. Matt, reflects

our effectively and tap a it's year last paying finishing think, and again was if up but dance maybe case to to this we acquisition, as think little year our first will use willingness we focused the is ended and on opportunities that to this and with we shareholders said foremost but At that. million compelling it as I'll capital we've of growth, foremost, dividend about year, around I $XX excess the themselves a that with approximately present case Marita we've question generated whether the ability communicated first what that double year. we this your prior I buy-back as addition So bit, that shown NTA shares, of to to capital generate gives the and had do us

we think remain We those - and do focus with. organically. that on the I we ago willing to a organically are year shown were growth oriented where definitely So levers same, we've to want but

Operator

question next Shields KBW. is go from The ahead. from Please Meyer

Meyer Shields

linear understand back and you sure it like supplemental over more of year, sort the the I expecting in in little of of the course or want are that - Property-Casualty distributed frequency effectively? I just guess steep half guidance, make a the are is to recovery year, the bit assuming the the I a the claim vaccines

Marita Zuraitis

Yes.

return think we of both as patterns, growth, it's think the loss I P&C gradual, both of in right. well way Supplemental, and is as

when had quarter, with momentum growth began the to XXXX, If we we line look and in onset a top the decent slow obviously, first you think perspective, from in at that first XXXX And at bit improvement of of towards then a year. the similarly; little physicality. we see and the We in of of pandemic reverse. look did end the the loss only

and opposite of in patterns plan more show be will an would when some When I Supplemental repeat will will numbers people normal of to normal And thinking a people and gradual. So the be gradual. about over expect we're similar how think begin as would would it. to care our gradual expect driving more and be coverage how not U.S. to during our similar when of And that I but as pattern expect to a XXXX the the the momentum, only way. we really be will feel more So to same quarter XXXX our will as XXXX just think return amount use loss a gradual, mean, guidance return before, includes life will to they be we line we that I fourth miles, a think about life? Bret? to you as almost comfortable in that's top just return in

Bret Conklin

certainly And you jump certainly after we couple know hitting a maybe comments. Mark Yes. well, and But as year don't overall Meyer, not can I if and for linear. make experienced here I on were about the in frequency

as level a let as look back certainly the XXXX attributable here factoring to we that to about The XX%. going likely was are in drop, in XXXX. quarter In well, XX% around most are not in XXXX. benefit in fourth frequency a auto drop, I the I'll a second Supplemental then talk third Mark saw we extent Yes, about XX% think that quarter and was we the quarter about still some, solid P&C the XXXX, Yes, investment XXXX. XXXX. current as and same XXXX, the but and And to not from behavior Life the really, in and in Retirement COVID income in rock you then but from reduced increase Supplemental. at alternative largely again from improving and it's step to are year, earnings reduction

don't you the little maybe if So know and upon Mark, touch color perhaps add wanted as to on severity well. a I frequency

Mark Desrochers

Bret. Absolutely, Yes.

some XXXX I about that looking over just be with loss to a overall relationship little and happening is we how costs we at we've at it's inverse on important things bit an believe of think costs, what looking between what's of out focus our not at when playing actually about really we're the are it's shifted loss frequencies, seeing because severity. frequency look and

see at least removal at So is we the bender by - know drop by smaller frequency, of of losses. part it partially fender least as type that we the driven in

economy And get them HMDrive the as of about offset we're driving seen being that is might continue as severities that an with we not year, partially data general most of behaviors the Now to during speeding around a safely certainly decrease frequency. below for matter. we're frequency some said, events, third quarter. or customers, educator but hear see what the finished that to continue the says, have true as the the population, out our impact we which and continued anecdotally we examine driving accident to we have that certainly the of Bret continue seeing pandemic, as out did driving immune especially those pretty see higher we shifting this notably the we we compared speeding we consistent not from levels result, And regarding that to pre-pandemic see

Meyer Shields

about tremendously frequency mean are product the can't there decide changes of the production impacting behavioral you little as we've seen talk pandemic? a parts profitability. so did of the terms side On that in case flexibility that And in is helpful. some of course without, policy live Supplemental, educators and bit so over maybe that we've Can obviously seen I maybe the both that they

Bret Conklin

have impact benefits know relates in roughly down as I'll paid as on you about Let we jump But well. the related ended pandemic it the the points. Wade me X percentage year to, ratio, start, and maybe

could Our get last benefits XX, was is been that expenses the But but probably reimbursed to in they paid. you year. to they And that benefits paid million as have - - had get just and I'll COVID the in in really those of related not policies it not ratio as for chime $X not far go think majority going approximately just that pieces I case, to the perhaps as is that, under on the People about pandemic care item. XX.X that's Wade related on don't of place.

Wade Rugenstein

designed. the policies, flexibility look Sure, lot I think Bret. at Yes, there a I I mean when they're of how is in

but up our certainly cancer and of some A last coverages see, I lot terms an be for in customers think and will hospital don't of think behavior they heart outside this but have that's coverages usage down type into in the year the just claims, adjust move accident, as the the aren't disability the is that forward. XXXX. and past would maybe gradual where are we flexibility I of around those to maybe changed or stable in the benefits, the think people I that to going return I them pretty

Marita Zuraitis

Wade. that's right. I Yes, think absolutely

very before. in and environment they much needed as straightforward are expenses a I think products were the post-pandemic the cover be just that they will as

both heightened. life in buy that of insurance kind to also believe propensity We this the and probably supplemental environment is

Operator

ahead. Piper is The John question go from Please Barnidge next Sandler. from

John Barnidge

there the inflows behavior level congrats stimulus, of and and retirement? 'XX. XQ a quarter. Thank uptick In XQ 'XX in last on and you of the similar in you noted XQ XQ Do expect in 'XX as record 'XX result a was a

Bret Conklin

too. And can John, perhaps Bret. here in this is Weckenbrock Mike chime

I to you out financial Horace there. turmoil traditionally there's will see think or Mann, flows as if when it been do relates we and that the not drops crisis,

a prime this example. is think year I

in want my up saw contrary to add deposits think the in contract I was don't anything that's if increase comment. know our it XXXX, I run is to think remarks, industry. prepared but you going to for X.X% to I there and we an Mike that

Mike Weckenbrock

No.

We decrease the, a on transactions Bret. in I think hit withdrawal actually saw you well. it as

very strong year. So

consideration. continuing the speaks and that the they educators they be think workplace to in long-term take the to planning - it under I

John Barnidge

a high post in physical expectation do then just And I then that maybe it And an you world if don't percent pandemic actually but and question some distribution schools schools. Okay. another be know of virtual I could, hybrid. versus schools may will what have specifically are get your I footprint? remain scale, currently

Marita Zuraitis

Yes, all think John, I question we've and a hearing. I think good it's been

replacement a education doesn't in think a fact physicality. public in the are fewer level is isn't I All what in that virtual for drops a there it environment physical provide provides. studies done prevailing scores just what's of becoming that the U.S. the being

the chosen all goes we hybrid, environments, of than are will about We right. open we you bars week When probably and having no hybrid, been what new that we're next close take discussion that whether - for what around a as of a it's political hoping do all was seen happens, it's go are be. the is track days our because hopefully, and mean, are we think a can we've that. for us a as telling and had to as all will they if because doubt of as I something, hope schools has and isn't many But pandemic. I have school those physicality our they then the that in physical, snow schools the soon there like physical what quickly environments just better will system operating new that approach taking the about have doing to our just of But work have - What possible believe prior whether different is in our benefit to different as think to this it's companies to even opposed our keep then the the replacement change? systems goes that of that predominantly our schools same environment, the are education And remote and out physicality. physical and learning. approaches, we really what and day. U.S. take learning whether keeping lot that majority post-pandemic. we it and to will thing as no discussion approaches, on hard changing are in virtual do works I constantly many those we be Right? I'm school XXX% and snow all of applying school back the fronts I I a as - eventually day have even get the what go the system figuring I we school all as that across example virtual,

John Barnidge

initial thank around if I it's you seems possibly it's just that so Is loss to And X your one is cat. right, 'XX averaged X.X very All more cat X it it is guidance that could far? much. on experience year sneak Historically that on over in. This to a years realization about XQ the points. points X.X last XX or XX based points,

Marita Zuraitis

Not at know anything put all. didn't When about that we all, first not together, at we January.

that going know that splits about to pretty to number but don't that has you X-year that the that years, obviously, number it of actuarial is. you all last it number out So amount is push does if heavy look averages, XX-year X and conservative. The you add thing the That's do be absolutely run averages math. you what X the When nothing at to number, only be, the cats, that. years just that more is It's number higher. know could and with

Bret Conklin

- but will given I what's actually it's support that like happened John, and right, load, that remarks said, Yes, like even noted think said we be prepared the cat appropriate feel does she I at won't recently. that XX-year so that my that average does that represent it in Marita the math occur

Marita Zuraitis

All is right. it know we that be won't

Operator

Please question is & from Gary from Partners. ahead. go Dowling next The Ransom

Gary Ransom

would of in things higher auto underlying there's loss sequence. have quarter across out than different things I'm little trying lot that to the If get think sweep and quarters, fourth a what a going - is in I the ratios of bit across seems the the look the I I on expected

know. year wondered is unpack over was ratio? going and be us may quarter some you fourth There what seeing there some be efforts we quarter prior in if of it is I told the You were XX% seasonality was just and loss may results. other to things the it I the it XX was the there that improve happening the last from frequency, think on, course could impact kind XX% is and that of what I

Bret Conklin

going Yes, - from Bret. variability, tend other full to upon this I things, this here can year year off But think can we've got extra a with you I'll as few hand et you and the But we from COVID obviously certainly - Mark a quarter-to-quarter lot minute. hit at And seasonality on things have some I you to look in is of cetera. quarter-to-quarter have a Gary, it combined some obviously. but ROE. below underlying is it would and year certainly to targeted target the get But great on P&C We to coverages points as will, uptick quarter, basis a we for on XX our total end it day all XX fourth in. specific ratio the saw a if in relates I'll you - bit that of of Mark to little the maybe comment let

Mark Desrochers

alluded think coming quarter the than the It we've was disappear when UM, out into in our close continuing the Yes, frequency thought claims. couple about And we some but look And distribution. absolutely probably before script, of I of this from what we're that's certainly effect some And UIM played higher. of severity we Gary, you certainly think expectations, the to is Bret. a so seen there a normal. at little Bret the some uptick - good to seen probably to I an how play-out is related made also to seeing of kind certainly I seasonality the better reasonably little pretty a out mentioned relative thought in played fourth points what I actually bit smaller losses we loss the to bit we've then and fourth quarter. think what

loss we up most accident-based XX%, bit. are costs if of to say coverages flat our coverages So is at about actually about even in year but UIM little UM, the for look the down a

debt year with begin we UIM. but which an have so in increase a to last the in increase bit certainly small to with, a would economy debts seen lesser the predicted seen impact. We but claims, extent, of is pandemic sort the don't a we early definitely over on of have So, half fourth effects on of UM, we've that, of a what also and we more quarter that impacts. And seen that's little get those the the long-term lot

So we it's, to is of the accident effect see offset I in might there somewhat economy what severity is in think some driving pure that's frequency. on what going

Bret Conklin

year have add the fourth think Yes, would though below points said, I strongest our I can fourth very auto sometimes the four of the I I fourth not good and may quarter, roughly from ago. quarter noted it you your think, a very, as note for quarter property the be opposite it's where elevated Gary. in can even way know be quarter. that still from third And year Mark quarter kind in

Marita Zuraitis

of line, the we But affect how of XXXX. point the fourth to saw would there thought in about strong that restoration profitability profitability us and we was that it nothing the for put the analysis that quarter guidance forward where the concerned the we

Gary Ransom

why UIM the uninsured there that's on is that roads Am the I lot happening? Is claim take more to at activity that out from UM, point? a this drivers

Bret Conklin

Gary uninsured. But think right. I a lot it's of it's under-insured, somewhat

are less people So this environment in perhaps buying coverage.

Gary Ransom

Right.

Bret Conklin

our right, not, are BI have UM drivers they limits. our are and limits But higher employed, teachers still

they policy, they're struck be some of struck policy that by typically UIM would more with someone So maybe by higher the more limit limit a whereas when claims. minimum creates

Gary Ransom

for sorry said was accruals your - up those expense you extension script I the question an what normal at some thanks. Can Can accruals. Bret I'm get you in right, or us All are normal on a remind ratio, year-end? that it

Bret Conklin

with have of is trued with but accruals as part initiatives of it. our Certainly that et - modernization, the cetera. the compensation one some And we for year just on for any going expenses we results incentive the up consulting just

I the results. say, true all to of our So, we fourth reflect normal nothing incentive up the of in would certainly actual quarter comp out

Gary Ransom

in bit of Changing expected, business it that you performing at enough. give you I'm you like you time a that? seeing the are but the it very on acquisition you about us what the you little context is than Can how asking thoughts of thought, turning you versus a of from fair the that view on out maybe well. the and us expected subjects business but thought supplemental some question it what give it's Okay, as seems now? can better

Marita Zuraitis

have infrastructure which to product interestingly in the the the of sold bought to of And we brought saw and COVID-XX. strategy, some to is health have Yes, from an inorganic looked standpoint, life We hit product opportunities, these the a the I mean with our due sales to same the to using virtual three brought those when not across on we not PDI were our arms, selling for integration that the didn't offer, operations. that systems similar think softness way at in why it it I relationships we and work that potential enough, brought educators on that two is and some an schools organization agents strategy. all was in industry, system HR it went rest to two back example, ability activity our in almost of ability advance organizations, life our and our needed site the NTA both investment pillars, distribution a environment

I they the, thought come way through. things when are those P, the NTA D we all would and So thought coming advanced it through exactly the and I about the

joined cross-sell XX% when very the but to scratch able this to be, build cross-sell during supplemental, We than agents repeatable we took as benefits there. haven't on that We business fact. seeing Mann of we conservative we're I acceleration the year life own ahead knew the writing about and we're sales opportunity. be territory it. better into what would is agents our as financials. we this now that of their even we a industry. about auto, of are begun writing the us writing surface excited We reason would look think our we to is Horace get be no seeing and And matter NTA and what opportunity far as didn't about I this they believe is get that offer our with the There mean, retirement, skis won't and process

agent. auto of Our month in was supplemental November agent the NTA previous a

now start annual in and to and coverage. that that seeing through reviews are their Mann Horace policy the we So agents including come are supplemental offering

it it our as an process our mistake and benefit So this of we built modeled? better performing be repeatable than financially strategy yes, into is we make is, what It would organization. when but knew we the sales no

Operator

is ahead. Please The Sandler. a next Barnidge follow-up question John from Piper from go

John Barnidge

Last question it. care lot. took of Thanks a

Marita Zuraitis

You're welcome.

Operator

Right, to any over question-and-answer would this Heather I for the turn to conference closing like back concludes our session. Wietzel remarks.

Heather Wietzel

of I'll for we that available virtual is us follow-up, continuing particular will additional week, the coming the meetings if months. participating remind thank in we'll virtual In over to there you Yes, everyone to the be investor be and will be the today. I do the [indiscernible] joining rest of course all events.

and So, what's we people to going on. look forward to talking

So thank you again.

Marita Zuraitis

everybody. Thanks

Bret Conklin

you. Thank

Operator

today's conference for Thank The you attending concluded. now is presentation.

disconnect. now may You

Horace Mann Educators (HMN) 3 Feb 212020 Q4 Earnings call transcript