Horace Mann Educators Corp.: Q3 FY2025 earnings call

What management said about Q3 FY2025, from the documents filed with the SEC on 4 November 2025: press release. The quarter’s numbers.

Key takeaways

Adjusted book value per share defined: Adjusted book value per share divides shareholders’ equity, excluding after-tax unrealized investment gains and discount-rate reserve remeasurements, by ending shares outstanding. Source
Combined ratio below 100% means profitable underwriting: The combined ratio is the sum of the loss and expense ratios; management says below 100% generally indicates profitable underwriting before net investment income. Source
Underlying combined ratio excludes catastrophes and reserve development: The underlying combined ratio removes catastrophe losses and prior years’ reserve development from the sum of the loss and expense ratios. Source
Catastrophe costs include allocated expenses: Catastrophe costs are catastrophe losses net of reinsurance, including allocated loss adjustment expenses and reinstatement premiums, before income tax benefits. Source
Prior years reserve development defined: Prior years’ reserve development tracks changes in net incurred claim reserves for earlier calendar years at successive valuation dates, for the Property & Casualty segment. Source
Core earnings exclude investment gains and other items: Core earnings exclude investment gains, legacy commercial exposures, intangible amortization, market risk benefit changes, impairments and certain non-recurring items. Source

“In the opinion of the Company’s management, a discussion of these measures provides investors, financial analysts, rating agencies and other financial statement users”
Horace Mann Educators Corp., press release

What changed from last quarter

New: The glossary replaces the debt to total capitalization ratio with an adjusted version that also excludes restricted cash for debt repayment. Source

Exhibit scope and definitions

Exhibit contains definitions only: The exhibit is a glossary of selected terms and contains no quarterly results, guidance or sector values. Source
Non-GAAP measures may not be comparable: The company says other companies may calculate these measures differently, so the measures may not be comparable across companies. Source
Some measures exclude impairments and amortization: Some measures exclude goodwill and intangible asset impairments, intangible asset amortization and legacy commercial exposures. Source

Book value measures

Adjusted book value per share defined: Adjusted book value per share divides shareholders’ equity, excluding after-tax unrealized investment gains and discount-rate reserve remeasurements, by ending shares outstanding. Source
Adjusted measure removes market-driven swings: Management says the adjusted measure removes items driven by financial market conditions that fluctuate from period to period. Source
Tangible book value per share defined: Tangible book value per share also removes goodwill and other intangible assets, including related deferred tax effects, from equity. Source

“In the opinion of management, a discussion of prior years’ reserve development is useful to investors as it allows them to assess the impact on current period earnings”
Horace Mann Educators Corp., press release

Property and casualty ratios

Loss ratio uses net incurred losses: The loss ratio divides net incurred losses and loss adjustment expenses by net premiums earned. Source
Expense ratio uses operating expenses and DAC: The expense ratio divides operating expenses plus amortization of policy acquisition costs by net earned premiums. Source
Combined ratio below 100% means profitable underwriting: The combined ratio is the sum of the loss and expense ratios; management says below 100% generally indicates profitable underwriting before net investment income. Source
Underlying combined ratio excludes catastrophes and reserve development: The underlying combined ratio removes catastrophe losses and prior years’ reserve development from the sum of the loss and expense ratios. Source

Catastrophes and reserve development

Catastrophe costs include allocated expenses: Catastrophe costs are catastrophe losses net of reinsurance, including allocated loss adjustment expenses and reinstatement premiums, before income tax benefits. Source
Catastrophe threshold is $25 million: The glossary treats an event as a catastrophe when it causes $25 million or more in insured property and casualty losses for the industry. Source
Prior years reserve development defined: Prior years’ reserve development tracks changes in net incurred claim reserves for earlier calendar years at successive valuation dates, for the Property & Casualty segment. Source
Net reserves are net of recoverables: Net reserves are property and casualty unpaid claim and claim expense reserves after deducting anticipated reinsurance recoverables. Source

Core earnings and return measures

Core earnings exclude investment gains and other items: Core earnings exclude investment gains, legacy commercial exposures, intangible amortization, market risk benefit changes, impairments and certain non-recurring items. Source
Core earnings per share defined: Core earnings per share is core earnings stated on a per common share basis. Source
Core return on equity defined: Core return on equity divides trailing 12-month core earnings by the five-quarter average of equity excluding unrealized gains and discount-rate remeasurements. Source
Investment yield annualizes year-to-date income: Investment yield annualizes year-to-date net investment income, excluding deposit asset income, limited partnership income and FHLB interest credited, over the portfolio carrying amount. Source

Benefits and sales measures

Benefits ratio for supplemental and group: The benefits ratio divides benefits, settlement expenses and reserve changes by net premiums and contract charges earned. Source
Pretax profit margin defined: Pretax profit margin divides income before income taxes by total revenues. Source
Sales measure agency productivity: The company says sales information measures the productivity of its agency force and is a leading indicator of future revenue trends. Source
Property and casualty sales definition: Property and casualty sales are premiums to be collected over the 12 months following the sale of new automobile and property policies. Source

Risks management discussed

External: Catastrophe timing and size cannot be predicted in advance, and their effects are not included in earnings or reserves before they occur. Source
Financial: Some measures exclude investment and discount-rate items that management says can be significantly affected by discretionary and economic factors. Source

Other quarters

Summarised with AI from the documents the company filed with the SEC. Every point is checked against the filing before it is shown: management’s own words word for word, figures against the line or table row they come from. A point that fails the check is left out. Source opens the filing at that line.

As filed with the SEC

Open the filing on EDGAR

Glossary of Selected Terms

The following measures are used by the Company’s management to evaluate performance against historical results and establish targets on a consolidated basis. A number of these measures are components of net income or the balance sheet but, in some cases, are not based on accounting principles generally accepted in the United States of America (non-GAAP) under applicable SEC rules because they are not displayed as separate line items in the Consolidated Statements of Operations and Comprehensive Income (Loss) or Consolidated Balance Sheets or are not required to be disclosed in the Notes to the Consolidated Financial Statements or, in some cases, there is inclusion or exclusion of certain items not ordinarily included or excluded in accordance with accounting principles generally accepted in the United States of America (GAAP).

In the opinion of the Company’s management, a discussion of these measures provides investors, financial analysts, rating agencies and other financial statement users with a better understanding of the significant factors that comprise the Company’s periodic results of operations and how management evaluates the Company's financial performance. Internally, the Company's management uses the measures to evaluate performance against historical results, to establish financial targets on a consolidated basis and for other reasons.

Some of these measures exclude net investment gains (losses), net unrealized investment gains (losses) on fixed maturity securities and net reserve remeasurements attributable to discount rates which can be significantly impacted by both discretionary and other economic factors and are not necessarily indicative of operating trends. Also, some of these measures exclude goodwill and intangible asset impairments, intangible asset amortization and legacy commercial exposures.

Other companies may calculate these measures differently, and, therefore, their measures may not be comparable to those used by the Company’s management.

Adjusted book value per share - The result of dividing (1) total shareholders’ equity excluding after-tax net unrealized investment gains (losses) on fixed maturity securities and after-tax net reserve remeasurements attributable to discount rates by (2) ending shares outstanding. Book value per share is the most directly comparable GAAP measure. Management believes it is useful to consider the trend in book value per share excluding net unrealized investment gains (losses) on fixed maturity securities and net reserve remeasurements attributable to discount rates in conjunction with book value per share to identify and analyze the change in net worth. Management also believes the non-GAAP measure is useful to investors because it eliminates the effect of items that can fluctuate significantly from period to period and are generally driven by economic developments, primarily financial market conditions, the magnitude and timing of which are generally not influenced by the Company’s underlying insurance operations.

Tangible book value per share - The result of dividing (1) total shareholders’ equity excluding after-tax net unrealized investment gains (losses) on fixed maturity securities after-tax net reserve remeasurements attributable to discount rates, goodwill and other intangible assets (including the related impact of deferred taxes) by (2) ending shares outstanding. Book value per share is the most directly comparable GAAP measure.

Adjusted debt to total capitalization ratio, excluding net unrealized investment gains (losses) on fixed maturity securities, net reserve remeasurements attributable to discount rates, and restricted cash for debt repayment - The result of dividing (1) total debt less debt to be repaid by restricted cash by (2) total debt less debt to be repaid by restricted cash, plus common shareholders' equity excluding after-tax net unrealized investment gains (losses) on fixed maturity securities and after-tax net reserve remeasurements attributable to discount rates from common shareholders' equity. The debt to total capitalization ratio is the most directly comparable GAAP measure.

Catastrophe costs - The sum of catastrophe losses, net of reinsurance and before income tax benefits that includes allocated loss adjustment expenses and reinsurance reinstatement premiums, excluding unallocated loss adjustment expenses.

Catastrophe losses - In categorizing property and casualty claims as being from a catastrophe, the Company utilizes the designations of the Property Claim Services, a subsidiary of Insurance Services Office, Inc., and additionally beginning in 2007, includes losses from all such events that meet the definition of a covered loss in the Company’s primary catastrophe excess of loss reinsurance contract, and reports claims and claim expense amounts net of reinsurance recoverables. A catastrophe is a severe loss resulting from natural and man-made events within a particular territory, including risks such as hurricane, fire, earthquake, windstorm, explosion, terrorism and other similar events, that causes $25 million or more in insured property and casualty losses for the industry and affects a significant number of property and casualty insurers and policyholders. Each catastrophe has unique characteristics. Catastrophes are not predictable as to timing or amount of loss in advance. Their effects are not included in earnings or claim and claim expense reserves prior to occurrence. In the opinion of the Company’s management, a discussion of the impact of catastrophes is meaningful for investors to understand the variability in periodic earnings.

Core earnings (loss) - Consolidated net income (loss) excluding the after-tax impact of net investment gains (losses), the after-tax impact of legacy commercial exposures, the after-tax impact of intangible asset amortization, the after-tax change in market risk benefits, discontinued operations, the after-tax impact of goodwill and intangible asset impairments, the cumulative effect of changes in accounting principles when applicable, and after-tax significant non-recurring or infrequent items that may not be indicative of ongoing operations. Net income is the most directly comparable GAAP measure.

Pretax core earnings (loss) - Pretax net income (loss) excluding the pretax impact of net investment gains (losses), the pretax impact of legacy commercial exposures, the pretax impact of intangible asset amortization, the pretax impact of the change in market risk benefits, discontinued operations, the pretax impact of goodwill and intangible asset impairments, the cumulative effect of changes in accounting principles when applicable, and pretax significant non-recurring or infrequent items that may not be indicative of ongoing operations. Income before income taxes is the most directly comparable GAAP measure.
Segment core earnings (loss) - Determined in the same manner as core earnings (loss) on a consolidated basis. Management uses segment core earnings to analyze each segment's performance and as a tool in making business decisions. Financial statement users also consider core earnings when analyzing the results and trends of insurance companies.

Core earnings (loss) per share - Core earnings on a per common share basis. Earnings per share is the most directly comparable GAAP measure.

Net premiums written and contract deposits - Management utilizes this non-GAAP measure, which is based on statutory accounting principles, in analyzing and evaluating business growth. Premiums and contract charges earned is the most directly comparable GAAP measure.

Net premiums written and contract deposits for the Company’s operating segments are as follows:

Property & Casualty

Net premiums written: Reflects the direct and assumed contractually determined amounts charged to policyholders for the effective period of the contract based on the terms and conditions of the contract and reflect gross premiums written less premiums ceded to reinsurers. The difference between premiums written and premiums earned is premiums unearned.

Life & Retirement

Life Insurance Product Lines:

Net premiums written and contract deposits: Reflects (1) the direct and assumed contractually determined amounts charged to policyholders for the effective period of the contract based on the terms and conditions of the contract and reflect gross premiums written less premiums ceded to reinsurers, and (2) the amount charged for policies in force during a fiscal period for traditional life business. Contract deposits include amounts received from customers on deposit-type contracts.

Retirement Product Lines:

Net annuity contract deposits: Reflects total recurring deposits and single deposits/rollovers - net of contract deposits ceded to reinsurers.

Supplemental & Group Benefits

Individual Supplemental Product Lines:

Net premiums written: Reflects (1) the direct and assumed contractually determined amounts charged to policyholders/certificate holders for the effective period of the contract based on the terms and conditions

of the contract and reflect gross premiums written less premiums ceded to reinsurers, and (2) the amount charged for policies in force during a fiscal period for traditional life business.

Group Benefits Product Lines:

Net premiums written: Reflects (1) the direct and assumed contractually determined amounts charged to policyholders for the effective period of the contract based on the terms and conditions of the contract and reflect gross premiums written less premiums ceded to reinsurers, and (2) the amount charged for policies in force during a fiscal period for traditional life business.

Investment yield, excluding limited partnership interests - annualized, pretax and after-tax - For the three month periods presented, investment yields are calculated by annualizing the result of year-to-date total net investment income, pretax adjusted to exclude (1) investment income from deposit asset on reinsurance, (2) investment income from limited partnership interests (excluding investment income on commercial mortgage loan funds) and (3) FHLB interest credited for the corresponding periods, divided by the average quarter-end and beginning of quarter carrying amount of the total investment portfolio as presented in the Consolidated Balance Sheets adjusted to exclude (1) FHLB funding agreements, (2) the carrying amount of limited partnership interests (excluding the carrying amount of commercial mortgage loan funds), and (3) gross unrealized investment gains (losses) on fixed maturity securities. For full year periods presented, investment yields are calculated by (i) summing the investment yields for each respective three-month period applicable to the year and (ii) dividing that sum per the calculation in (i) by four. Net investment income is the most directly comparable GAAP measure.

Net income return on equity - LTM: The ratio of (1) trailing 12 month net income to (2) the average of ending shareholders’ equity for the current quarter end and the preceding four quarter ends - referred to as the 5 quarter average of shareholders' equity.

Net income return on equity - Annualized: The ratio of (1) annualized net income to (2) the 2 quarter average of shareholders' equity.
Core return on equity - LTM: The ratio of (1) trailing 12 month core earnings to (2) the 5 quarter average of shareholders’ equity excluding net unrealized investment gains (losses) on fixed maturity securities and net reserve remeasurements attributable to discount rates. Net income return on equity - LTM is the most directly comparable GAAP measure.
Core return on equity - Annualized: The ratio of (1) annualized core earnings to (2) the 2 quarter average of shareholders’ equity excluding net unrealized investment gains (losses) on fixed maturity securities and net reserve remeasurements attributable to discount rates. Net income return on equity - Annualized is the most directly comparable GAAP measure.

Net reserves - Property and casualty unpaid claim and claim expense reserves net of anticipated reinsurance recoverables.

Prior years’ reserve development - A measure which the Company reports for its Property & Casualty segment which identifies the increase or decrease in net incurred claim and claim expense reserves at successive valuation dates for claims which occurred in previous calendar years. In the opinion of management, a discussion of prior years’ reserve development is useful to investors as it allows them to assess the impact on current period earnings of incurred claims experience from the current calendar year and previous calendar years.

Property & Casualty operating statistics - Operating measures utilized by the Company and the insurance industry regarding the relative profitability of property and casualty underwriting results.

Loss ratio - The ratio of (1) the sum of net incurred losses and loss adjustment expenses to (2) net premiums earned.
Underlying loss ratio - The sum of the loss ratio adjusted to remove the effect of catastrophe losses and prior years' reserve development. The loss ratio is the most directly comparable GAAP measure. Management believes this ratio provides a valuable measure of the Company's underlying underwriting performance that may be obscured by the effects of catastrophe losses and prior years' reserve development, the amounts of which may be significant and may vary significantly between periods.
Expense ratio - The ratio of (1) the sum of operating expenses and the amortization of policy acquisition costs to (2) net earned premiums.
Combined ratio - The sum of the loss ratio and the expense ratio. A combined ratio less than 100% generally indicates profitable underwriting prior to the consideration of net investment income.
Underlying combined ratio or combined ratio excluding catastrophe losses and prior years’ reserve development - The sum of the loss ratio and the expense ratio adjusted to remove the effect of catastrophe losses and prior years’ reserve development. The combined ratio is the most directly comparable GAAP measure. Management believes this ratio provides a valuable measure of the Company’s underlying underwriting performance that may be obscured by the effects of catastrophe losses and prior years’ reserve development, the amounts of which may be significant and may vary significantly between periods.

Supplemental & Group Benefits operating statistics - Operating measures utilized by the Company and the insurance industry regarding the relative profitability of supplemental and group benefits underwriting results.

Benefits ratio - The ratio of (1) the sum of benefits, settlement expenses and change in reserves to (2) net premiums and contract charges earned.
Operating expense ratio - The ratio of (1) the sum of operating expenses and DAC amortization expense to (2) total revenues.
Pretax profit margin - The ratio of (1) net income before income taxes to (2) total revenues.

Sales - Sales data pertains to Horace Mann products and excludes authorized products sold by exclusive agents that are underwritten by third-party vendors. Sales should not be viewed as a substitute for any GAAP measure, including "sales" as it relates to non-insurance companies, and the Company’s definition of sales, sales deposits or new annualized sales might differ from that used by other companies. The Company utilizes sales information as a performance measure that indicates the productivity of its agency force. Sales are also a leading indicator of future revenue trends.

Sales for the Company’s operating segments are as follows: