Horace Mann Q1 2025 slides: Record core EPS, P&C profitability surges

Horace Mann Educators Corporation (NYSE:HMN) reported record first-quarter core earnings per share of $1.07 in its Q1 2025 investor presentation released on May 6, 2025. The company highlighted significant improvements in profitability metrics, particularly in its Property & Casualty segment, and reaffirmed its trajectory toward sustainable double-digit returns.

Quarterly Performance Highlights

Horace Mann delivered strong first-quarter results with core earnings per share reaching $1.07, putting the company on track for record full-year core earnings. Core return on equity improved to 10.6%, up 4.9 percentage points year-over-year, demonstrating substantial progress toward the company’s strategic goal of sustainable double-digit returns.

Total (EPA:TTEF) revenues reached $416 million, representing an 8% increase compared to the prior year. Net premiums and contract charges earned also grew by 8.4%, driven by strong sales momentum and the benefit of rate actions across business segments.

As shown in the following chart of key financial metrics for Q1 2025, the company achieved significant improvements in its core performance indicators:

The Property & Casualty segment showed remarkable improvement with a combined ratio of 89.4%, a 10.5 percentage point enhancement over the prior year. This improvement reflects the company’s multi-year profitability strategy, with the Property combined ratio at 79.9% and Auto at 95.0%.

First-quarter segment core earnings for P&C reached $26.8 million, more than double the prior year’s figure. This substantial increase reflected improved underlying results, lower property frequency, and favorable prior years’ reserve development.

The following chart illustrates the P&C segment’s strong performance in terms of revenue growth and profitability improvements:

Segment Performance Analysis

While the P&C segment showed substantial improvement, the Life & Retirement segment reported core earnings below the prior year, primarily due to higher mortality. Despite this challenge, the segment saw positive trends with Life net premiums written up 8.7% over the prior year and Life annualized sales increasing by 4.3%.

The Individual Supplemental & Group Benefits segment delivered stable results with first-quarter core earnings of $14.0 million, reflecting higher net investment income and continued sales momentum. Individual Supplemental sales increased by an impressive 60.6% over the prior year, with a favorable benefits ratio of 28.4%.

Financial Position and Investment Portfolio

Horace Mann’s financial position continues to strengthen, as evidenced by 17 consecutive years of dividend increases. The company increased its annual dividend by 3% in March 2025, with a current yield of 3.3%. Year-to-date share repurchases totaled $7.2 million, with $130.9 million in share repurchases since initial authorization in 2011.

The following chart illustrates the company’s consistent growth in adjusted book value plus accumulated dividends, with a 7.0% compound annual growth rate since 2010:

The company maintains a high-quality, well-diversified investment portfolio with a fair value of $6.9 billion. The portfolio includes a $5.5 billion fixed-maturity component, with 74% rated A or higher and an average duration of 6.7 years. The first-quarter core pre-tax yield was 4.32%, with new money being invested at 5.51%.

The investment portfolio composition is illustrated in the following breakdown:

Strategic Initiatives and Market Position

Horace Mann continues to focus on its niche market of educators, where it has built approximately 13% market share in K-12 educators within its current footprint. The company’s strategic emphasis remains on providing tailored solutions for educators at every life stage, from pre-career through retirement.

The company’s PDI (OTC:IDXG) (Product, Distribution, Infrastructure) strategy aims to drive market share expansion through:

• Building robust and relevant products
• Advancing an integrated omni-channel distribution model
• Developing scalable infrastructure and digital capabilities

Forward Guidance

For full-year 2025, Horace Mann provided core EPS guidance of $3.85 to $4.15, based on core earnings of $160 million to $175 million. This guidance assumes approximately $90 million of catastrophe losses and total net investment income of $470-$480 million.

The company’s long-term profitability targets include:

• Auto combined ratio in the mid-90s
• Property combined ratio of 90 or below
• Continued strong performance in Life & Retirement and Supplemental & Group Benefits segments

As illustrated in the following guidance slide, the company has a clear roadmap for achieving its financial targets:

Horace Mann’s enterprise focus for sustained profitable growth follows a multi-year plan:

• 2024: Restored P&C profitability
• 2025: Business positioned to deliver 10%+ ROE; focus on sustained profitable growth
• 2026+: Deliver sustainable double-digit ROE and support continued growth

This strategic progression aligns with the company’s Q3 2024 performance, which showed a 73% increase in core earnings to $31.3 million, or $0.76 per diluted share, and a 9% rise in revenues. The Q1 2025 results continue this positive trajectory, particularly in the P&C segment where profitability has significantly improved.

With a strong financial position, improving operational metrics, and clear strategic direction, Horace Mann appears well-positioned to achieve its goal of sustainable double-digit returns while continuing to serve its core educator market.

Full presentation:

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