Horace Mann Educators - 10-Q quarterly report FY2024 Q3

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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q

☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended September 30, 2024

☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from ________ to ________

Commission file number 1-10890

HORACE MANN EDUCATORS CORPORATION

(Exact name of registrant as specified in its charter)


Delaware			37-0911756
(State or other jurisdiction of incorporation or organization)			(I.R.S. Employer Identification No.)

1 Horace Mann Plaza, Springfield, Illinois 62715-0001

(Address of principal executive offices) (Zip Code)

Registrant’s telephone number, including area code: 217-789-2500

Securities registered pursuant to Section 12(b) of the Act:

Title of each class

Trading Symbol(s)

Name of each exchange
on which registered

Common Stock, $0.001 par value

HMN

New York Stock Exchange

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☑ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☑ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of "large accelerated filer," "accelerated filer," "smaller reporting company," and "emerging growth company" in Rule 12b-2 of the Exchange Act.

Large accelerated filer

☑

Accelerated filer

☐

Non-accelerated filer

☐

Smaller reporting company

☐

Emerging growth company

☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act.). Yes ☐ No ☑

As of October 31, 2024, the registrant had 40,757,989 common shares, $0.001 par value, outstanding.

HORACE MANN EDUCATORS CORPORATION

QUARTERLY REPORT ON FORM 10-Q

FOR THE QUARTERLY PERIOD ENDED September 30, 2024

TABLE OF CONTENTS


PART I - FINANCIAL INFORMATION		Page

Item 1.	Consolidated Financial Statements

	Consolidated Balance Sheets as of September 30, 2024 (Unaudited) and December 31, 2023	1

	Consolidated Statements of Operations and Comprehensive Income (Loss) for the Three and Nine Months Ended September 30, 2024 and 2023 (Unaudited)	2

	Consolidated Statements of Changes in Shareholders’ Equity for the Three and Nine Months Ended Septem ber 30, 2024 and 2023 (Unaudited)	3

	Consolidated Statements of Cash Flows for the Three and Nine Months Ended September 30, 2024 and 2023 (Unaudited)	4

	Notes to Consolidated Financial Statements (Unaudited)
	Note 1 - Basis of Presentation and Significant Accounting Policies	5
	Note 2 - Investments	6
	Note 3 - Fair Value of Financial Instruments	12
	Note 4 - Short-Duration Insurance Contracts	18
	Note 5 - Long-Duration Insurance Contracts	19
	Note 6 - Reinsurance	31
	Note 7 - Segment Information	32
	Note 8 - Accumulated Other Comprehensive Income (Loss)	33
	Note 9 - Supplemental Consolidated Cash and Cash Flow Information	34
	Note 10 - Contingencies and Commitments	34

Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	35

Item 3.	Quantitative and Qualitative Disclosures About Market Risk	56

Item 4.	Controls and Procedures	57

PART II - OTHER INFORMATION

Item 1.	Legal Proceedings	58

Item 1A.	Risk Factors	58

Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	58

Item 5.	Other Information	58

Item 6.	Exhibits	59

SIGNATURES		64

PART I: FINANCIAL INFORMATION

ITEM 1. I Consolidated Financial Statements

HORACE MANN EDUCATORS CORPORATION

CONSOLIDATED BALANCE SHEETS

($ in millions, except share data)


	September 30, 2024		December 31, 2023
	(Unaudited)
Assets
Investments
Fixed maturity securities, available for sale, at fair value (amortized cost, net 2024, $5,875.0; 2023, $5,652.9)	$	5,573.2	$	5,235.3
Equity securities at fair value, (cost $102.9 and $86.2)	88.9		86.2
Limited partnership interests	1,087.2		1,138.8
Policy loans	141.9		141.4
Short-term and other investments	193.6		228.8
Total investments	7,084.8		6,830.5
Cash	39.8		29.7
Deferred policy acquisition costs	345.4		336.3
Reinsurance balances receivable	438.6		480.5
Deposit asset on reinsurance	2,461.1		2,496.6
Intangible assets	159.4		170.3
Goodwill	54.3		54.3
Other assets	397.4		357.6
Separate Account variable annuity assets	3,732.8		3,294.1
Total assets	$	14,713.6	$	14,049.9

Liabilities and Shareholders' Equity
Policy liabilities
Future policy benefit reserves	$	1,745.5	$	1,761.8
Policyholders' account balances	5,128.6		5,187.0
Unpaid claims and claim expenses	597.0		581.7
Unearned premiums	345.4		300.9
Total policy liabilities	7,816.5		7,831.4
Other policyholder funds	966.1		916.0
Other liabilities	364.5		287.1

Long-term debt	546.7		546.0
Separate Account variable annuity liabilities	3,732.8		3,294.1
Total liabilities	13,426.6		12,874.6
Preferred stock, $0.001 par value, authorized 1,000,000 shares; none issued	—		—
Common stock, $0.001 par value, authorized 75,000,000 shares; issued, 2024, 66,894,309; 2023, 66,747,821	0.1		0.1
Additional paid-in capital	518.3		510.9
Retained earnings	1,524.1		1,502.2
Accumulated other comprehensive income (loss), net of tax:
Net unrealized investment losses on fixed maturity securities	(237.2)		(328.3)
Net reserve remeasurements attributable to discount rates	21.8		21.9
Net funded status of benefit plans	(7.6)		(7.6)
Treasury stock, at cost, 2024, 26,167,246 shares; 2023, 25,911,087 shares	(532.5)		(523.9)
Total shareholders’ equity	1,287.0		1,175.3
Total liabilities and shareholders’ equity	$	14,713.6	$	14,049.9

The accompanying Notes are an integral part of these Consolidated Financial Statements.


Horace Mann Educators Corporation			1			Third Quarter 2024 Form 10-Q

HORACE MANN EDUCATORS CORPORATION

CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME (LOSS) (UNAUDITED)

($ in millions, except per share data)


	Three Months Ended September 30,				Nine Months Ended September 30,
	2024		2023		2024		2023
Statements of Operations
Revenues
Net premiums and contract charges earned	$	289.1	$	266.0	$	845.2	$	782.6
Net investment income	113.0		118.9		326.8		327.8
Net investment gains (losses)	3.8		(8.4)		0.1		(29.7)
Other income	6.2		2.2		14.1		8.3

Total revenues	412.1		378.7		1,186.2		1,089.0

Benefits, losses and expenses
Benefits, claims and settlement expenses (Reserve remeasurement (gains)/losses $1.2, $(0.6), $0.9, $(0.9))	191.3		199.2		574.9		587.6
Interest credited	54.8		52.7		161.5		152.1
Operating expenses	82.9		75.7		250.4		235.6
DAC amortization expense	28.1		26.3		82.1		75.4
Intangible asset amortization expense	3.6		3.7		10.9		11.1
Interest expense	8.7		7.5		26.1		21.1


Total benefits, losses and expenses	369.4		365.1		1,105.9		1,082.9

Income before income taxes	42.7		13.6		80.3		6.1
Income tax expense	8.4		1.9		15.7		0.6

Net income	$	34.3	$	11.7	$	64.6	$	5.5

Net income per share
Basic	$	0.83	$	0.28	$	1.56	$	0.13
Diluted	$	0.83	$	0.28	$	1.56	$	0.13

Weighted average number of shares and equivalent shares
Basic	41.2		41.3		41.3		41.3
Diluted	41.4		41.4		41.5		41.4

Statements of Comprehensive Income (Loss)
Net income	$	34.3	$	11.7	$	64.6	$	5.5
Other comprehensive income (loss), net of tax:
Change in net unrealized investment losses on fixed maturity securities	133.2		(141.0)		91.1		(85.1)
Change in net reserve remeasurements attributable to discount rates	(73.5)		90.7		(0.1)		74.6
Change in net funded status of benefit plans	—		—		—		—
Other comprehensive income	59.7		(50.3)		91.0		(10.5)
Comprehensive income (loss)	$	94.0	$	(38.6)	$	155.6	$	(5.0)

The accompanying Notes are an integral part of these Consolidated Financial Statements.


Horace Mann Educators Corporation			2			Third Quarter 2024 Form 10-Q

HORACE MANN EDUCATORS CORPORATION

CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS’ EQUITY (UNAUDITED)

($ in millions, except per share data)


	Three Months Ended September 30,				Nine Months Ended September 30,
	2024		2023		2024		2023
Common stock, $0.001 par value
Beginning balance	$	0.1	$	0.1	$	0.1	$	0.1
Options exercised	—		—		—		—
Conversion of common stock units	—		—		—		—
Conversion of restricted stock units	—		—		—		—
Ending balance	0.1		0.1		0.1		0.1

Additional paid-in capital
Beginning balance	515.8		505.7		510.9		502.6
Options exercised and conversion of common and restricted stock units	0.3		0.3		0.5		(0.8)
Share-based compensation expense	2.2		2.5		6.9		6.7
Ending balance	518.3		508.5		518.3		508.5

Retained earnings
Beginning balance	1,504.0		1,478.6		1,502.2		1,512.4
Net income	34.3		11.7		64.6		5.5
Dividends, 2024, $0.34 per share; 2023, $0.33 per share	(14.2)		(13.8)		(42.7)		(41.4)
Ending balance	1,524.1		1,476.5		1,524.1		1,476.5

Accumulated other comprehensive income (loss), net of tax:
Beginning balance	(282.7)		(359.6)		(314.0)		(399.4)
Change in net unrealized investment losses on fixed maturity securities	133.2		(141.0)		91.1		(85.1)
Change in net reserve remeasurements attributable to discount rates	(73.5)		90.7		(0.1)		74.6
Change in net funded status of benefit plans	—		—		—		—
Ending balance	(223.0)		(409.9)		(223.0)		(409.9)

Treasury stock, at cost
Beginning balance	(528.4)		(522.9)		(523.9)		(517.4)
Treasury stock acquired - share repurchase authorization	(4.1)		(1.0)		(8.6)		(6.5)
Ending balance	(532.5)		(523.9)		(532.5)		(523.9)
Shareholders' equity at end of period	$	1,287.0	$	1,051.3	$	1,287.0	$	1,051.3

The accompanying Notes are an integral part of these Consolidated Financial Statements.


Horace Mann Educators Corporation			3			Third Quarter 2024 Form 10-Q

HORACE MANN EDUCATORS CORPORATION

CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)

($ in millions)


	Nine Months Ended September 30,
	2024		2023
Cash flows - operating activities
Net income (loss)	$	64.6	$	5.5
Adjustments to reconcile net income (loss) to net cash provided by operating activities:
Net investment gains (losses)	(0.1)		29.8
Depreciation and intangible asset amortization	19.4		19.5
Share-based compensation expense	7.3		7.1
Loss (gain) from equity method investments, net of dividends or distributions	12.9		9.0
Changes in:
Insurance liabilities	121.6		122.3
Amounts due under reinsurance agreements	41.9		26.9
Income tax liabilities	(4.4)		8.1
Other operating assets and liabilities	7.5		(28.1)
Contributions to defined benefits plan	(1.2)		—
Other, net	(10.9)		(0.9)
Net cash provided by operating activities	258.6		199.2
Cash flows - investing activities
Fixed maturity securities purchases	(841.6)		(462.3)
Fixed maturity securities sales	202.3		341.4
Fixed maturity securities maturities, paydowns, calls and redemptions	420.0		213.9
Equity securities purchases	(3.6)		(2.4)
Equity securities sales and repayments	—		16.6
Limited partnership interests purchases	(55.4)		(183.2)
Limited partnership interests sales	94.2		15.1
Change in short-term and other investments, net	46.4		(24.7)

Other-net	6.3		—
Net cash used in investing activities	(131.4)		(85.6)
Cash flows - financing activities
Dividends paid to shareholders	(41.7)		(40.4)

Proceeds from issuance of 2023 Senior Notes due 2028	—		297.7
Principal repayment on Revolving Credit Facility	—		(249.0)

Treasury stock acquired	(8.6)		(6.5)
Proceeds from exercise of stock options	1.1		—
Withholding tax payments on RSUs tendered	(1.7)		(1.8)
Annuity contracts: variable, fixed and FHLB funding agreements:
Deposits	550.0		571.8
Benefits, withdrawals and net transfers to Separate Account variable annuity assets	(465.5)		(464.3)
Repayment of FHLB funding agreements	(170.0)		(89.5)
Life policy accounts deposits, withdrawals, and surrenders	7.7		6.2
Change in deposit asset on reinsurance	(35.7)		(78.6)
Net increase (decrease) in reverse repurchase agreements	45.0		(70.0)
Change in book overdrafts	2.3		2.5
Net cash used in financing activities	(117.1)		(121.9)
Net decrease in cash	10.1		(8.3)
Cash at beginning of period	29.7		42.8
Cash at end of period	$	39.8	$	34.5

The accompanying Notes are an integral part of these Consolidated Financial Statements.


Horace Mann Educators Corporation			4			Third Quarter 2024 Form 10-Q

HORACE MANN EDUCATORS CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

NOTE 1 - Basis of Presentation and Significant Accounting Policies

Business

Horace Mann Educators Corporation is a holding company for insurance subsidiaries that market and underwrite personal lines of property and casualty insurance products (primarily personal lines of auto and property insurance), life insurance products, retirement products (primarily tax-qualified fixed and variable annuities), worksite direct insurance products (primarily cancer, heart, hospital, supplemental disability and accident coverages), and employer-sponsored group benefit products (primarily short-term and long-term group disability, and group term life coverages), primarily to K-12 teachers, administrators and other employees of public schools and their families (collectively, HMEC, the Company or Horace Mann).

The Company conducts and manages its business in four reporting segments: (1) Property & Casualty, (2) Life & Retirement, (3) Supplemental & Group Benefits and (4) Corporate & Other.

Basis of Presentation

The accompanying Consolidated Financial Statements have been prepared in conformity with accounting principles generally accepted in the United States of America (GAAP) and with the rules and regulations of the Securities and Exchange Commission (SEC). Certain information and disclosures normally included in annual financial statements prepared in conformity with GAAP, but are not required for interim reporting purposes, have been omitted. These Consolidated Financial Statements and Notes thereto should be read in conjunction with the Consolidated Financial Statements and Notes thereto included in Part II - Item 8 of the Company's Annual Report on Form 10-K for the year ended December 31, 2023. The results of operations for the three and nine months ended September 30, 2024 are not necessarily indicative of the results to be expected for the full year.

The accompanying Consolidated Financial Statements and Notes thereto are unaudited and reflect all adjustments (generally consisting only of normal recurring accruals) which are, in the opinion of management, necessary for the fair presentation of the consolidated financial position, results of operations and cash flows for the interim periods. The Company's significant accounting policies are summarized in Part II - Item 8, Note 1 of the Consolidated Financial Statements in the Company's Annual Report on Form 10-K for the year ended December 31, 2023.

The Company has reclassified the presentation of certain prior period information to conform to the current year's presentation.

Consolidation

All intercompany transactions and balances between HMEC and its subsidiaries and affiliates have been eliminated.

Use of Estimates

The preparation of consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the reporting date of the consolidated financial statements, and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from these estimates.

The most significant critical accounting estimates include valuation of hard-to-value fixed maturity securities, evaluation of credit loss impairments for fixed maturity securities, valuation of future policy benefit reserves, and valuation of liabilities for property and casualty unpaid claims and claim expense reserves.

Future Adoption of New Accounting Standards

Improvements to Reportable Segment Disclosures

In November 2023, the FASB issued ASU 2023-07, Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures. This update will improve reportable segment disclosure requirements, primarily through


Horace Mann Educators Corporation			5			Third Quarter 2024 Form 10-Q

NOTE 1 - Basis of Presentation and Significant Accounting Policies (continued)

enhanced disclosures about significant segment expenses. ASU 2023-07 includes: 1) a requirement to disclose significant segment expenses that are regularly provided to the chief operating decision maker (CODM) and included within each reported measure of segment profit or loss, 2) a requirement to disclose an amount for other segment items by reportable segment and a description of its composition, 3) a requirement to disclose a reportable segments profit or loss and assets currently required by Topic 280 in interim periods, 4) clarifies that in addition to the measure that is most consistent with the measurement principles under generally accepted accounting principles (GAAP), a public entity is not precluded from reporting additional measures of a segment's profit or loss that are used by the CODM in assessing segment performance and deciding how to allocate resources, and 5) a requirement to disclose the title and position of the CODM and an explanation of how the CODM uses the reported measure(s) of segment profit or loss in assessing segment performance and deciding how to allocate resources.

This guidance will be effective for the Company for annual periods beginning after December 15, 2023 and interim periods beginning after December 15, 2024. Early adoption is permitted. The guidance will have no net impact on the Company's consolidated financial position, results of operations, or cash flows.

Improvements to Income Tax Disclosures

In December 2023, the FASB issued ASU 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures. This update will improve the transparency of income tax disclosures by requiring (1) consistent categories and greater disaggregation of information in the rate reconciliation and (2) income taxes paid disaggregated by jurisdiction. It also includes certain other amendments to improve the effectiveness of income tax disclosures.

This guidance will be effective for the Company for annual periods beginning after December 15, 2024 and interim periods beginning after December 15, 2025. Early adoption is permitted. The guidance will have no net impact on the Company's consolidated financial position, results of operations, or cash flows.

NOTE 2 - Investments

Net Investment Income

The components of net investment income for the following periods were as follows:


($ in millions)	Three Months Ended September 30,				Nine Months Ended September 30,
	2024		2023		2024		2023
Fixed maturity securities	$	69.4	$	68.7	$	211.8	$	201.6
Equity securities	1.3		1.3		3.9		4.7
Limited partnership interests	14.5		20.5		28.9		40.6
Short-term and other investments	6.0		4.6		15.0		11.6
Investment expenses	(4.0)		(3.3)		(9.8)		(9.5)
Net investment income - investment portfolio	87.2		91.8		249.8		249.0
Investment income - deposit asset on reinsurance	25.8		27.1		77.0		78.8
Total net investment income	$	113.0	$	118.9	$	326.8	$	327.8

Net Investment Gains (Losses)

Net investment gains (losses) for the following periods were as follows:


($ in millions)	Three Months Ended September 30,				Nine Months Ended September 30,
	2024		2023		2024		2023
Fixed maturity securities	$	(0.3)	$	(3.4)	$	(3.6)	$	(20.5)
Equity securities	5.1		(2.1)		5.6		(6.6)
Short-term investments and other	(1.0)		(2.9)		(1.9)		(2.6)
Net investment gains (losses)	$	3.8	$	(8.4)	$	0.1	$	(29.7)


Horace Mann Educators Corporation			6			Third Quarter 2024 Form 10-Q

NOTE 2 - Investments (continued)

The Company, from time to time, sells fixed maturity securities subsequent to the reporting date but prior to the issuance of the financial statements that were in an unrealized loss position but no credit loss was recognized and there was no intent to sell the securities at the reporting date. Such sales are due to issuer-specific events occurring subsequent to the reporting date that result in a change in the Company's intent to sell a fixed maturity security. The types of events that may result in a sale include significant changes in the economic facts and circumstances related to the invested asset, significant unforeseen changes in liquidity needs, or changes in the Company's investment strategy.

Net Investment Gains (Losses) by Transaction Type

The breakdown of net investment gains (losses) by transaction type for the following periods were as follows:


($ in millions)	Three Months Ended September 30,				Nine Months Ended September 30,
	2024		2023		2024		2023
Credit loss impairments	$	(0.5)	$	—	$	(0.5)	$	(0.5)
Intent-to-sell impairments	(0.2)		(0.6)		(0.2)		(6.7)
Total impairments	(0.7)		(0.6)		(0.7)		(7.2)
Sales and other, net	0.1		(3.5)		(3.2)		(25.2)
Change in fair value - equity securities	5.2		(1.4)		5.7		5.3
Change in fair value and gains (losses) realized on settlements - derivatives	(0.8)		(2.9)		(1.7)		(2.6)
Net investment gains (losses)	$	3.8	$	(8.4)	$	0.1	$	(29.7)

Allowance for Credit Loss Impairments on Fixed Maturity Securities

The following table presents changes in the allowance for credit loss impairments on fixed maturity securities classified as available for sale for the category of other asset-backed securities (no other categories of fixed maturity securities have an allowance for credit loss impairments):


($ in millions)	Three Months Ended September 30,				Nine Months Ended September 30,
	2024		2023		2024		2023
Beginning balance	$	1.1	$	1.2	$	1.2	$	1.2
Credit losses on fixed maturity securities for which credit losses were not previously reported	—		—		1.7		0.5
Net increase related to credit losses previously reported	0.5		—		(0.4)		—
Reduction of credit allowances related to sales	—		—		(0.9)		—
Write-offs	—		—		—		(0.5)
Ending balance	$	1.6	$	1.2	$	1.6	$	1.2


Horace Mann Educators Corporation			7			Third Quarter 2024 Form 10-Q

NOTE 2 - Investments (continued)

Fixed Maturity Securities

The Company's investment portfolio is comprised primarily of fixed maturity securities. Amortized cost, net, gross unrealized investment gains (losses) and fair values of all fixed maturity securities in the portfolio were as follows:


($ in millions)	Amortized Cost, net		Gross Unrealized Gains		Gross Unrealized Losses		Fair Value
September 30, 2024
Fixed maturity securities
U.S. Government and federally sponsored agency obligations:
Mortgage-backed securities	$	770.3	$	9.3	$	51.3	$	728.3
Other, including U.S. Treasury securities	436.1		1.4		51.8		385.7
Municipal bonds	1,258.7		29.7		72.7		1,215.7
Foreign government bonds	17.1		—		0.6		16.5
Corporate bonds	2,104.8		32.3		192.6		1,944.5
Other asset-backed securities	1,288.0		14.3		19.8		1,282.5
Totals	$	5,875.0	$	87.0	$	388.8	$	5,573.2

December 31, 2023
Fixed maturity securities
U.S. Government and federally sponsored agency obligations:
Mortgage-backed securities	$	713.4	$	4.4	$	64.6	$	653.2
Other, including U.S. Treasury securities	450.8		0.8		62.8		388.8
Municipal bonds	1,333.4		28.6		91.9		1,270.1
Foreign government bonds	23.1		—		1.0		22.1
Corporate bonds	1,969.9		23.1		220.3		1,772.7
Other asset-backed securities	1,162.3		6.0		39.9		1,128.4
Totals	$	5,652.9	$	62.9	$	480.5	$	5,235.3


Horace Mann Educators Corporation			8			Third Quarter 2024 Form 10-Q

NOTE 2 - Investments (continued)

The following table presents the fair value and gross unrealized losses for fixed maturity securities in an unrealized loss position as of September 30, 2024 and December 31, 2023, respectively. The Company views the decrease in fair value of all of the fixed maturity securities with unrealized losses as of September 30, 2024 as due to factors other than a credit loss. As of September 30, 2024, the Company has not made the decision to sell and it is not more likely than not the Company will be required to sell the fixed maturity securities with unrealized losses before a recovery of the amortized cost basis. In reaching our conclusion that an allowance for credit is unnecessary, we considered the factors described in the evaluation of credit loss impairments for fixed maturity securities critical accounting estimate in our Annual Report on Form 10-K. In the current nine months ended September 30, 2024, the performance of fixed maturity securities has been impacted by the change in interest rates, specifically interest rates being at relatively high levels compared to interest rates at the time of acquisition of the securities. In consideration of the factors, we expect to receive cash flows sufficient to recover the entire amortized cost basis of the securities in the following table.


($ in millions)	12 Months or Less					More than 12 Months					Total
	Fair Value			Gross Unrealized Losses		Fair Value			Gross Unrealized Losses		Fair Value			Gross Unrealized Losses
September 30, 2024
Fixed maturity securities
U.S. Government and federally sponsored agency obligations:
Mortgage-backed securities	$	—		$	—	$	471.4		$	51.3	$	471.4		$	51.3
Other	1.3			—		292.8			51.9		294.1			51.9
Municipal bonds	19.3			0.1		681.1			72.5		700.4			72.6
Foreign government bonds	—			—		14.9			0.7		14.9			0.7
Corporate bonds	177.7			10.6		1,136.1			182.0		1,313.8			192.6
Other asset-backed securities	100.0			0.2		391.8			19.5		491.8			19.7
Total	$	298.3		$	10.9	$	2,988.1		$	377.9	$	3,286.4		$	388.8

Number of positions with a gross unrealized loss	163					1,953					2,116
Fair value as a percentage of total fixed maturity securities at fair value	5.4		%			53.6		%			59.0		%

December 31, 2023
Fixed maturity securities
U.S. Government and federally sponsored agency obligations:
Mortgage-backed securities	$	45.3		$	0.8	$	458.5		$	63.8	$	503.8		$	64.6
Other	39.5			0.4		288.0			62.4		327.5			62.8
Municipal bonds	64.5			0.9		724.6			91.0		789.1			91.9
Foreign government bonds	1.5			—		20.6			1.0		22.1			1.0
Corporate bonds	195.0			25.4		1,171.3			194.9		1,366.3			220.3
Other asset-backed securities	133.4			0.8		752.5			39.1		885.9			39.9
Total	$	479.2		$	28.3	$	3,415.5		$	452.2	$	3,894.7		$	480.5

Number of positions with a gross unrealized loss	195					2,305					2,500
Fair value as a percentage of total fixed maturity securities at fair value	9.2		%			65.2		%			74.4		%


Horace Mann Educators Corporation			9			Third Quarter 2024 Form 10-Q

NOTE 2 - Investments (continued)

With regards to fixed maturity securities that had gross unrealized losses more than 12 months, the number of positions by their respective credit ratings were as follows:


	Number of Positions
	September 30, 2024	December 31, 2023
Credit Rating
AAA	172	226
AA	922	1,006
A	341	423
BBB	380	448
Total investment grade	1,815	2,103
BB	54	93
B	20	39
CCC or lower	3	7
Total below investment grade	77	139
Not rated	61	63
Totals:	1,953	2,305

Fixed maturity securities with an investment grade rating represented 92.5% of the gross unrealized losses as of September 30, 2024. For the same reasons discussed above, we expect to receive cash flow sufficient to recover the entire amortized cost basis of the securities in the previous table.

Maturities of Fixed Maturity Securities

The following table presents the distribution of the Company’s fixed maturity securities portfolio by estimated expected maturity. Estimated expected maturities differ from contractual maturities, reflecting assumptions regarding borrowers' utilization of the right to call or prepay obligations with or without call or prepayment penalties. For structured securities, estimated expected maturities consider broker-dealer survey prepayment assumptions and are verified for consistency with the interest rate and economic environments.


($ in millions)	September 30, 2024
	Amortized Cost, net		Fair Value		Percent of Total Fair Value
Estimated expected maturity:
Due in 1 year or less	$	267.8	$	268.4	4.8	%
Due after 1 year through 5 years	1,531.5		1,518.5		27.2	%
Due after 5 years through 10 years	1,597.0		1,548.1		27.8	%
Due after 10 years through 20 years	1,452.2		1,345.4		24.2	%
Due after 20 years	1,026.5		892.8		16.0	%
Total	$	5,875.0	$	5,573.2	100.0	%

Average option-adjusted duration, in years	5.7


Horace Mann Educators Corporation			10			Third Quarter 2024 Form 10-Q

NOTE 2 - Investments (continued)

Sales of Fixed Maturity and Equity Securities

Proceeds received from sales of fixed maturity and equity securities, each determined using the specific identification method, and gross gains and gross losses realized as a result of those sales for each period were as follows:


($ in millions)	Three Months Ended September 30,				Nine Months Ended September 30,
	2024		2023		2024		2023
Fixed maturity securities
Proceeds received	$	9.3	$	135.2	$	202.3	$	341.4
Gross gains realized	0.1		1.4		2.1		2.0
Gross losses realized	—		(2.8)		(5.3)		(13.9)

Equity securities
Proceeds received	$	—	$	6.8	$	—	$	16.6
Gross gains realized	—		—		—		—
Gross losses realized	—		(0.5)		—		(11.8)

Net Unrealized Investment Gains (Losses) on Fixed Maturity Securities

The following table reconciles net unrealized investment gains (losses) on fixed maturity securities, net of tax, included in AOCI:


($ in millions)	Three Months Ended September 30,				Nine Months Ended September 30,
	2024		2023		2024		2023
Net unrealized investment gains (losses) on fixed maturity securities, net of tax
Beginning of period	$	(370.4)	$	(393.7)	$	(328.3)	$	(449.6)
Change in net unrealized investment gains (losses) on fixed maturity securities	132.8		(143.7)		88.2		(101.3)
Reclassification of net investment losses on fixed maturity securities to net income	0.4		2.7		2.9		16.2
End of period	$	(237.2)	$	(534.7)	$	(237.2)	$	(534.7)

Limited Partnership Interests

Investments in limited partnership interests are accounted for using the equity method of accounting (EMA) and include interests in commercial mortgage loan funds, real estate equity funds, private equity funds, infrastructure equity funds, infrastructure debt funds and other funds. Principal factors influencing carrying amount appreciation or depreciation include operating performance, comparable public company earnings multiples, capitalization rates and the economic environment. The carrying amounts of EMA limited partnership interests were as follows:


($ in millions)
	September 30, 2024		December 31, 2023
Commercial mortgage loan funds	$	600.1	$	660.8
Real estate equity funds	102.0		109.2
Private equity funds	99.0		92.7
Infrastructure equity funds	77.3		77.2
Infrastructure debt funds	67.0		59.1
Other funds(1)	141.8		139.8
Total	$	1,087.2	$	1,138.8

(1)Other funds consist primarily of limited partnership interests in corporate mezzanine, venture capital and private credit funds.


Horace Mann Educators Corporation			11			Third Quarter 2024 Form 10-Q

NOTE 2 - Investments (continued)

Offsetting of Assets and Liabilities

The Company's derivatives are subject to enforceable master netting arrangements. Collateral support agreements associated with each master netting arrangement provides that the Company will receive or pledge financial collateral in the event minimum thresholds have been reached. The Company’s reverse repurchase agreements are also subject to enforceable master netting arrangements but there was no offsetting in their presentation in the Company’s Consolidated Balance Sheets. Information regarding the Company's derivatives is contained in Part II - Item 8, Note 4 in the Company's Annual Report on Form 10-K for the year ended December 31, 2023. The following table presents instruments that were subject to a master netting arrangement for the Company.


($ in millions)			Gross Amounts Offset in the Consolidated Balance Sheets		Net Amounts of Assets/ Liabilities Presented in the Consolidated Balance Sheets		Gross Amounts Not Offset in the Consolidated Balance Sheets
	Gross Amounts						Financial Instruments		Cash Collateral Received		Net Amount
September 30, 2024
Asset derivatives:
Free-standing derivatives	$	22.5	$	—	$	22.5	$	—	$	23.6	$	(1.1)

December 31, 2023
Asset derivatives:
Free-standing derivatives	$	19.0	$	—	$	19.0	$	—	$	18.5	$	0.5

Reverse Repurchase Agreements

In connection with reverse repurchase agreements, the Company transfers primarily U.S. government, government agency and corporate securities and receives cash. For reverse repurchase agreements, the Company receives cash in an amount equal to at least 95% of the fair value of the securities transferred, and the agreements with third parties contain contractual provisions to allow for additional collateral to be obtained when necessary. The Company accounts for reverse repurchase agreements as secured borrowings. The securities transferred under reverse repurchase agreements are included in Fixed maturity securities with the obligation to repurchase those securities reported in Other liabilities on the Company's Consolidated Balance Sheets. The fair value of the securities transferred was $46.9 million as of September 30, 2024 and $0.0 million as of December 31, 2023. The obligation for securities sold under reverse repurchase agreements was a net amount of $45.0 million as of September 30, 2024 and $0.0 million December 31, 2023.

Deposits

As of September 30, 2024 and December 31, 2023, fixed maturity securities with a fair value of $27.7 million and $29.2 million were on deposit with governmental agencies as required by law in various states for which the insurance subsidiaries of HMEC conduct business. In addition, as of September 30, 2024 and December 31, 2023, fixed maturity securities with a fair value of $1,030.2 million and $987.2 million, respectively, were on deposit with the Federal Home Loan Bank of Chicago (FHLB) as collateral for amounts subject to funding agreements, advances and borrowings which were equal to $959.5 million as of September 30, 2024 and $904.5 million as of December 31, 2023. The deposited securities are reported as Fixed maturity securities on the Company’s Consolidated Balance Sheets.

NOTE 3 - Fair Value of Financial Instruments

The Company is required to disclose estimated fair values for certain financial and nonfinancial assets and liabilities. Fair values of the Company’s insurance contracts other than annuity contracts (which are investment contracts) and EMA limited partnership interests are not required to be disclosed. However, the estimated fair values of liabilities under all insurance contracts are taken into consideration in the Company’s overall management of interest rate risk through appropriate matching of investment maturities with amounts due under insurance contracts.

Information regarding the three-level fair value hierarchy presented below and the valuation methodologies utilized by the Company to estimate fair values at each reporting date is included in Part II - Item 8, Note 3 of the


Horace Mann Educators Corporation			12			Third Quarter 2024 Form 10-Q

NOTE 3 - Fair Value of Financial Instruments (continued)

Consolidated Financial Statements in the Company’s Annual Report on Form 10-K for the year ended December 31, 2023.

Financial Instruments Measured and Carried at Fair Value on a Recurring Basis

The following table presents the Company's fair value hierarchy for financial assets and financial liabilities measured and carried at fair value on a recurring basis. During the nine months ended September 30, 2024 and 2023, there were no transfers between Level 1 and Level 2. As of September 30, 2024 and December 31, 2023, Level 3 invested assets comprised 9.5% of the Company’s total investment portfolio at fair value.


($ in millions)	Carrying Amount		Fair Value		Fair Value Measurements at Reporting Date Using
					Level 1		Level 2		Level 3
September 30, 2024
Financial Assets
Investments
Fixed maturity securities
U.S. Government and federally sponsored agency obligations:
Mortgage-backed securities	$	728.3	$	728.3	$	—	$	728.3	$	—
Other, including U.S. Treasury securities	385.7		385.7		25.3		360.4		—
Municipal bonds	1,215.7		1,215.7		—		1,139.1		76.6
Foreign government bonds	16.5		16.5		—		16.5		—
Corporate bonds	1,944.5		1,944.5		8.2		1,553.5		382.8
Other asset-backed securities	1,282.5		1,282.5		—		1,197.8		84.7
Total fixed maturity securities	5,573.2		5,573.2		33.5		4,995.6		544.1
Equity securities	88.9		88.9		19.5		65.4		4.0
Short-term investments	91.6		91.6		91.6		—		—
Other investments	22.5		22.5		—		22.5		—
Totals	$	5,776.2	$	5,776.2	$	144.6	$	5,083.5	$	548.1
Separate Account variable annuity assets(1)	$	3,732.8	$	3,732.8	$	3,732.8	$	—	$	—

Financial Liabilities(2)	$	86.1	$	86.1	$	—	$	5.0	$	81.1

December 31, 2023
Financial Assets
Investments
Fixed maturity securities
U.S. Government and federally sponsored agency obligations:
Mortgage-backed securities	$	653.2	$	653.2	$	—	$	653.2	$	—
Other, including U.S. Treasury securities	388.8		388.8		45.6		343.2		—
Municipal bonds	1,270.1		1,270.1		—		1,196.1		74.0
Foreign government bonds	22.1		22.1		—		22.1		—
Corporate bonds	1,772.7		1,772.7		10.1		1,420.1		342.5
Other asset-backed securities	1,128.4		1,128.4		—		1,030.9		97.5
Total fixed maturity securities	5,235.3		5,235.3		55.7		4,665.6		514.0
Equity securities	86.2		86.2		17.9		63.8		4.5
Short-term investments	132.9		132.9		132.9		—		—
Other investments	19.0		19.0		—		19.0		—
Totals	$	5,473.4	$	5,473.4	$	206.5	$	4,748.4	$	518.5
Separate Account (variable annuity) assets(1)	$	3,294.1	$	3,294.1	$	3,294.1	$	—	$	—

Financial Liabilities(2)	$	86.0	$	86.0	$	—	$	3.6	$	82.4

(1) Separate Account variable annuity assets represent contractholder funds invested in various actively traded mutual funds that have daily quoted net asset values that are readily determinable for identical assets that the Company can access. Separate Account variable annuity liabilities are equal to the estimated fair value of the Separate Account variable annuity assets.

(2) Represents embedded derivatives related to fixed indexed annuity and indexed universal life products reported in Future policy benefit reserves and Other policyholder funds as well as net MRBs reported in Policyholders' account balances in the Company's Consolidated Balance Sheets.


Horace Mann Educators Corporation			13			Third Quarter 2024 Form 10-Q

NOTE 3 - Fair Value of Financial Instruments (continued)

Changes in Level 3 Fair Value Measurements

The reconciliation for all financial assets and financial liabilities measured at fair value on a recurring basis using significant unobservable inputs (Level 3) were as follows:


($ in millions)	Financial Assets												Financial Liabilities(1)
	Municipal Bonds		Corporate Bonds		Mortgage-Backed and Other Asset- Backed Securities(2)		Total Fixed Maturity Securities		Equity Securities		Total
Beginning balance, July 1, 2024	$	72.1	$	366.4	$	85.4	$	523.9	$	2.7	$	526.6	$	77.9
Transfers into Level 3(3)	—		11.8		8.0		19.8		—		19.8		—
Transfers out of Level 3(3)	—		(3.9)		(4.0)		(7.9)		—		(7.9)		—
Total gains or losses
Net investment gains (losses) included in net income	—		—		(0.5)		(0.5)		0.1		(0.4)		—
Net investment (gains) losses included in net income related to financial liabilities	—		—		—		—		—		—		6.6
Net unrealized gains (losses) included in OCI	1.4		(3.4)		1.5		(0.5)		—		(0.5)		0.2
Purchases	3.2		19.9		—		23.1		1.2		24.3		—
Issuances	—		—		—		—		—		—		0.8
Sales	—		—		—		—		—		—		—
Settlements	—		—		—		—		—		—		—
Paydowns, maturities and distributions	(0.1)		(8.0)		(5.7)		(13.8)		—		(13.8)		(4.4)
Ending balance, September 30, 2024	$	76.6	$	382.8	$	84.7	$	544.1	$	4.0	$	548.1	$	81.1

Beginning balance, January 1, 2024	$	74.0	$	342.5	$	97.5	$	514.0	$	4.5	$	518.5	$	82.4
Transfers into Level 3(3)	—		11.8		8.0		19.8		—		19.8		—
Transfers out of Level 3(3)	—		(8.3)		(4.0)		(12.3)		—		(12.3)		—
Total gains or losses
Net investment gains (losses) included in net income	—		(0.8)		0.3		(0.5)		0.4		(0.1)		—
Net investment (gains) losses included in net income related to financial liabilities	—		—		—		—		—		—		7.6
Net unrealized gains (losses) included in OCI	—		(3.6)		3.0		(0.6)		—		(0.6)		0.2
Purchases	3.2		61.6		1.8		66.6		1.2		67.8		—
Issuances	—		—		—		—		—		—		3.6
Sales	—		—		—		—		—		—		—
Settlements	—		—		—		—		—		—		—
Paydowns, maturities and distributions	(0.6)		(20.4)		(21.9)		(42.9)		(2.1)		(45.0)		(12.7)
Ending balance, September 30, 2024	$	76.6	$	382.8	$	84.7	$	544.1	$	4.0	$	548.1	$	81.1

(1)Represents embedded derivatives related to fixed indexed annuity and indexed universal life products reported in Future policy benefit reserves and Other policyholder funds as well as net MRBs reported in Policyholders' account balances in the Company's Consolidated Balance Sheets.

(2)Includes U.S. Government and federally sponsored agency obligations for mortgage-backed securities and other asset-backed securities.

(3)Transfers into and out of Level 3 during the three and nine months ended September 30, 2024 were related to changes in the primary pricing source or changes in observability of external information used in determining fair value. The Company's policy is to recognize transfers into and out of the levels as having occurred at the end of the reporting period in which the transfers were determined.


Horace Mann Educators Corporation			14			Third Quarter 2024 Form 10-Q

NOTE 3 - Fair Value of Financial Instruments (continued)


($ in millions)	Financial Assets												Financial Liabilities(1)
	Municipal Bonds		Corporate Bonds		Mortgage-Backed and Other Asset- Backed Securities(2)		Total Fixed Maturity Securities		Equity Securities		Total
Beginning balance, July 1, 2023	$	63.9	$	311.5	$	101.4	$	476.8	$	2.0	$	478.8	$	83.6
Transfers into Level 3(3)	—		—		—		—		—		—		—
Transfers out of Level 3(3)	—		(3.7)		—		(3.7)		—		(3.7)		—
Total gains or losses
Net investment gains (losses) included in net income	—		—		—		—		0.2		0.2		—
Net investment (gains) losses included in net income related to financial liabilities	—		—		—		—		—		—		(3.2)
Net unrealized gains (losses) included in OCI	5.9		(12.8)		2.0		(4.9)		—		(4.9)		0.4
Purchases	—		17.5		1.7		19.2		—		19.2		—
Issuances	—		—		—		—		—		—		2.0
Sales	—		—		—		—		—		—		—
Settlements	—		—		—		—		—		—		—
Paydowns, maturities and distributions	(0.1)		(7.3)		(4.6)		(12.0)		—		(12.0)		(4.5)
Ending balance, September 30, 2023	$	69.7	$	305.2	$	100.5	$	475.4	$	2.2	$	477.6	$	78.3

Beginning balance, January 1, 2023	$	54.4	$	261.3	$	107.6	$	423.3	$	2.0	$	425.3	$	91.3
Transfers into Level 3(3)	—		36.1		0.8		36.9		—		36.9		—
Transfers out of Level 3(3)	—		(3.7)		—		(3.7)		—		(3.7)		—
Total gains or losses
Net investment gains (losses) included in net income	—		—		—		—		0.2		0.2
Net investment (gains) losses included in net income related to financial liabilities	—		—		—		—		—		—		(5.6)
Net unrealized gains/losses included in OCI	6.5		(14.1)		0.9		(6.7)		—		(6.7)		(0.3)
Purchases	9.5		43.2		1.9		54.6		—		54.6		—
Issuances	—		—				—		—		—		6.3
Sales	—		(7.7)				(7.7)		—		(7.7)		—
Settlements	—		—				—		—		—		—
Paydowns, maturities and distributions	(0.7)		(9.9)		(10.7)		(21.3)		—		(21.3)		(13.4)
Ending balance, September 30, 2023	$	69.7	$	305.2	$	100.5	$	475.4	$	2.2	$	477.6	$	78.3

(1) Represents embedded derivatives related to fixed indexed annuity and indexed universal life products reported in Future policy benefit reserves and Other policyholder funds as well as net MRBs reported in Policyholders' account balances in the Company's Consolidated Balance Sheets.

(2) Includes U.S. Government and federally sponsored agency obligations for mortgage-backed securities and other asset-backed securities.

(3) Transfers into and out of Level 3 during the three and nine months ended September 30, 2023 were related to changes in the primary pricing source or changes in observability of external information used in determining fair value. The Company's policy is to recognize transfers into and out of the levels as having occurred at the end of the reporting period in which the transfers were determined

For the three and nine months ended September 30, 2024, the Company had net losses of $0.4 million and $0.1 million with respect to Level 3 financial assets. For the three and nine months ended September 30, 2023, the Company had net gains of $0.2 million with respect to Level 3 financial assets.

For the three and nine months ended September 30, 2024, the Company had a net loss of $6.6 million and $7.6 million, respectively, that were included in net income and were attributable to changes in the fair value of Level 3 financial liabilities. For the three and nine months ended September 30, 2023, the Company had net gains of $3.2 million and $5.6 million, respectively, that were included in net income and were attributable to changes in the fair value of Level 3 financial liabilities.


Horace Mann Educators Corporation			15			Third Quarter 2024 Form 10-Q

NOTE 3 - Fair Value of Financial Instruments (continued)

Level 3 Assets and Liabilities by Price Source

The table below presents the balances of Level 3 assets and liabilities measured at fair value with their corresponding pricing sources:


($ in millions)
	Total		Internal		External
September 30, 2024
Financial Assets
Fixed maturity securities
U.S. Government and federally sponsored agency obligations:
Mortgage-backed securities	$	—	$	—	$	—
Municipal bonds	76.6		—		76.6
Corporate bonds	382.8		224.8		158.0
Other asset-backed securities	84.7		—		84.7
Total fixed maturity securities	544.1		224.8		319.3
Equity securities	4.0		—		4.0
Totals	$	548.1	$	224.8	$	323.3

Financial Liabilities(1)	$	81.1	$	81.1	$	—

December 31, 2023
Financial Assets
Fixed maturity securities
U.S. Government and federally sponsored agency obligations:
Mortgage-backed securities	$	—	$	—	$	—
Municipal bonds	74.0		—		74.0
Corporate bonds	342.5		180.4		162.1
Other asset-backed securities	97.5		—		97.5
Total fixed maturity securities	514.0		180.4		333.6
Equity securities	4.5		—		4.5
Totals	$	518.5	$	180.4	$	338.1

Financial Liabilities(1)	$	82.4	$	82.4	$	—

(1) Represents embedded derivatives related to fixed indexed annuity and indexed universal life products reported in Future policy benefit reserves and Other policyholder funds as well as net MRBs reported in Policyholders' account balances in the Company's Consolidated Balance Sheets.

External pricing sources for securities represent prices from prior transactions or unadjusted third-party pricing information where pricing inputs are not readily available.

Quantitative Information about Level 3 Fair Value Measurements

The following table provides quantitative information about the significant unobservable inputs for recurring fair value measurements categorized with Level 3.

($ in millions)

Fair Value

as of

September 30, 2024

Valuation Technique(s)

Unobservable Inputs

Range

(Weighted Average)

and Single Point

Best Estimate(1)

Impact of Increase in Input on Fair Value

Financial Assets

Corporate bonds

224.8

discounted cash flow

yield

3.7% - 16.2%

decrease

discounted cash flow

option adjusted spread

306 bps - 832 bps

decrease

Financial Liabilities

Derivatives embedded in fixed indexed annuity products

86.8

discounted cash flow

lapse rate

5.9%

decrease

mortality multiplier(2)

69.4%

decrease

option budget

0.9% - 3.8%

increase

non-performance adjustment(3)

5.0%

decrease

Net MRBs

(5.7)

discounted cash flow

lapse rate

5.9%

decrease

mortality multiplier(2)

69.4%

increase

(1) When a range of unobservable inputs is not readily available, the Company uses a single point best estimate.

(2) Mortality multiplier is applied to the Annuity 2000 table.

(3) Determined as a percentage of the risk-free rate.


Horace Mann Educators Corporation			16			Third Quarter 2024 Form 10-Q

NOTE 3 - Fair Value of Financial Instruments (continued)

The valuation techniques and significant unobservable inputs used in the fair value measurement for financial assets and financial liabilities classified as Level 3 are subject to the processes as described in Part II - Item 8, Note 3 in the Company’s Annual Report on Form 10-K for the year ended December 31, 2023. Generally, valuation techniques for corporate bonds include using discounted cash flow techniques where the unobservable input is the yield. The yield used for the valuation of these fixed maturity securities is less observable than securities classified as Level 2.

Financial Instruments Not Carried at Fair Value

The Company has various other financial assets and financial liabilities used in the normal course of business that are not carried at fair value, but for which fair value disclosure is required. These financial assets and financial liabilities are further described in Part II - Item 8, Note 3 in the Company's Annual Report on Form 10-K for the year ended December 31, 2023. The following table presents the carrying amount and fair value of the Company’s financial assets and financial liabilities not carried at fair value and the level within the fair value hierarchy at which such financial assets and liabilities are categorized.


($ in millions)	Carrying Amount		Fair Value		Fair Value Measurements at Reporting Date Using
					Level 1		Level 2		Level 3
September 30, 2024
Financial Assets
Other investments	$	221.1	$	224.4	$	—	$	36.2	$	188.2
Deposit asset on reinsurance	2,461.1		2,268.1		—		—		2,268.1
Financial Liabilities
Policyholders' account balances	5,042.0		4,751.8		—		—		4,751.8
Reverse repurchase agreement	45.0		46.9		—		46.9		—
Other policyholder funds	966.1		966.1		—		963.3		2.8
Long-term debt	546.7		578.7		—		578.7		—

December 31, 2023
Financial Assets
Other investments	$	218.4	$	221.7	$	—	$	33.8	$	187.9
Deposit asset on reinsurance	2,496.6		2,259.6		—		—		2,259.6
Financial Liabilities
Policyholders' account balances	4,996.3		4,861.8		—		—		4,861.8
Other policyholder funds	916.0		916.0		—		908.7		7.3
Long-term debt	546.0		571.4		—		571.4		—


Horace Mann Educators Corporation			17			Third Quarter 2024 Form 10-Q

NOTE 4 - Short-Duration Insurance Contracts

Property & Casualty Unpaid Claims and Claim Expense Reserves

The following table is a summary reconciliation of the beginning and ending Property & Casualty unpaid claims and claim expense reserves for the periods indicated. The table presents reserves on both a gross and net (after reinsurance) basis. The total net Property & Casualty insurance claims and claim expense incurred amounts are reflected in the Consolidated Statements of Operations and Comprehensive Income (Loss). The end of period gross reserves (before reinsurance balances and reinsurance recoverable balances) are reflected on a gross basis in the Consolidated Balance Sheets.


($ in millions)	Three Months Ended September 30,				Nine Months Ended September 30,
	2024		2023		2024		2023
Property & Casualty
Beginning gross reserves	$	432.9	$	415.8	$	416.8	$	388.7
Less: reinsurance recoverables	101.7		104.3		104.0		100.8
Net reserves, beginning of period(1)	331.2		311.5		312.8		287.9
Incurred claims and claim expenses:
Claims occurring in the current period	147.8		149.2		431.4		430.0
Increase (decrease) in estimated reserves for claims occurring in prior periods(2)	(13.0)		—		(19.2)		—
Total claims and claim expenses incurred	134.8		149.2		412.2		430.0
Claims and claim expense payments for claims occurring during:
Current period	102.3		115.9		241.0		246.7
Prior periods	31.6		30.9		152.0		157.3
Total claims and claim expense payments	133.9		146.8		393.0		404.0
Net reserves, end of period(1)	332.1		313.9		332.1		313.9
Plus: reinsurance recoverables	101.3		105.4		101.3		105.4
Ending gross reserves	$	433.4	$	419.3	$	433.4	$	419.3

(1)Reserves net of expected reinsurance recoverables.

(2)Shows the amounts by which the Company increased (decreased) its reserves in each of the periods indicated for claims occurring in previous periods to reflect subsequent information on such claims and changes in their projected final settlement costs - also known as prior years' reserve development.

The company recognized $13.0 million and $19.2 million of net favorable prior years' reserve development for the three and nine months ended September 30, 2024. There was no prior years' reserve development for Property & Casualty claims for the three and nine months ended September 30, 2023. The net favorable development for the nine months ended September 30, 2024 was primarily a result of favorable loss trends in auto and property for accident years 2023 and prior.

Group Benefits Unpaid Claims and Claim Expense Reserves

The following table is a summary reconciliation of the beginning and ending Group Benefits unpaid claims and claim expense reserves for the periods indicated. The table presents reserves on both a gross and net (after reinsurance). The total net Group Benefits insurance claims and claim expense incurred amounts are reflected in the Consolidated Statements of Operations and Comprehensive Income (Loss). The end of period gross reserves (before reinsurance balances and reinsurance recoverable balances) are reflected on a gross basis in the Consolidated Balance Sheets.


Horace Mann Educators Corporation			18			Third Quarter 2024 Form 10-Q

NOTE 4 - Short-Duration Insurance Contracts (continued)


($ in millions)	Three Months Ended September 30,				Nine Months Ended September 30,
	2024		2023		2024		2023
Group Benefits
Beginning gross reserves	$	116.1	$	121.9	$	116.6	$	121.6
Less: reinsurance recoverables	28.0		28.2		27.7		27.9
Net reserves, beginning of period(1)	88.1		93.7		88.9		93.7
Incurred claims and claim expenses:
Claims occurring in the current period	18.5		20.0		58.0		61.0
Increase (decrease) in estimated reserves for claims occurring in prior periods(2)	(3.9)		(7.6)		(13.2)		(15.5)
Total claims and claim expenses incurred	14.6		12.4		44.8		45.5
Claims and claim expense payments for claims occurring during:
Current period	10.5		12.2		22.6		25.3
Prior periods	4.8		4.3		23.7		24.3
Total claims and claim expense payments	15.3		16.5		46.3		49.6
Net reserves, end of period(1)	87.4		89.6		87.4		89.6
Plus: reinsurance recoverables	27.8		27.5		27.8		27.5
Ending gross reserves	$	115.2	$	117.1	$	115.2	$	117.1

(1) Reserves net of expected reinsurance recoverables.

(2) Shows the amounts by which the Company increased (decreased) its reserves in each of the periods indicated for claims occurring in previous periods to reflect subsequent information on such claims and changes in their projected final settlement costs - also known as prior years' reserve development.

Favorable prior years' reserve development for Group Benefits was $3.9 million and $7.6 million for the three months ended September 30, 2024 and 2023 and $13.2 million and $15.5 million for the nine months ended September 30, 2024 and 2023, respectively. The favorable development for the nine months ended September 30, 2024 was primarily the result of favorable loss trends in group life and disability for loss years 2023 and prior. The favorable development for the nine months ended September 30, 2023 was primarily the result of favorable loss trends in specialty health and group life and disability for loss years 2023 and prior.

Reconciliation of Property & Casualty and Group Benefits Unpaid Claims and Claim Expense Reserves to the Consolidated Balance Sheets


($ in millions)	As of September 30, 2024		As of December 31, 2023
Ending gross reserves
Property & Casualty	$	433.4	$	416.8
Group Benefits	115.2		116.6
Total short-duration insurance contracts	548.6		533.4
Other than short-duration(1)	48.4		48.3
Total unpaid claims and claims expenses	$	597.0	$	581.7

(1) This line includes Life & Retirement, Supplemental, and other certain group benefit reserves.

Note 5 - Long-Duration Insurance Contracts

Liability for Future Policy Benefits

As of and for the three and nine months ended September 30, 2024 and 2023, the Company updated the net premium ratio when updating for actual historical experience for the quarter; future cash flow assumptions were reviewed but not changed.

The following tables summarize balances and changes in LFPB for traditional and limited-pay contracts.


Horace Mann Educators Corporation			19			Third Quarter 2024 Form 10-Q

NOTE 5 - Long-Duration Insurance Contracts (continued)

The balances of and changes in LFPB as of and for the three months ended September 30, 2024 were as follows:


($ in millions)
	Whole Life		Term Life		Experience Life(1)		Limited-Pay Whole Life		Supplemental Health(2)		SPIA (life contingent)
Present value of expected net premiums:
Balance at July 1, 2024	$	215.0	$	236.5	$	68.0	$	32.0	$	180.2	$	—
July 1, 2024 balance at original discount rate	247.5		261.8		66.4		34.5		217.8		—
Effect of:
Change in cash flow assumptions	—		—		—		—		—		—
Actual variances from expected experience	0.8		0.2		(1.6)		(0.2)		—		—
Adjusted balance at July 1, 2024	248.3		262.0		64.8		34.3		217.8		—
Issuances(3)	3.3		6.1		—		1.1		4.5		1.1
Interest accruals(4)	1.9		2.7		0.9		0.3		1.8		—
Net premiums collected(5)	(5.8)		(6.5)		(1.5)		(1.2)		(5.9)		(1.1)
September 30, 2024 balance at original discount rate	247.7		264.3		64.2		34.5		218.2		—
Effect of changes in discount rate assumptions	(20.9)		(13.1)		4.8		(1.2)		(28.3)		—
Balance at September 30, 2024	226.8		251.2		69.0		33.3		189.9		—

Present value of expected future policy benefits:
Balance at July 1, 2024	494.9		364.4		825.3		85.6		400.7		98.5
July 1, 2024 balance at original discount rate	598.2		417.4		788.4		108.8		505.7		108.8
Effect of:
Changes in cash flow assumptions	—		—		—		—		—		—
Actual variances from expected experience	0.7		0.2		(2.2)		(0.1)		(0.3)		0.1
Adjusted balance at July 1, 2024	598.9		417.6		786.2		108.7		505.4		108.9
Issuances	3.2		6.0		—		0.9		4.6		1.1
Interest accruals	5.0		4.0		11.7		1.0		3.7		1.1
Benefit payments(6)	(7.2)		(5.4)		(12.9)		(0.5)		(16.3)		(2.7)
September 30, 2024 balance at original discount rate	599.9		422.2		785.0		110.1		497.4		108.4
Effect of changes in discount rate assumptions	(68.9)		(30.6)		84.6		(16.4)		(84.0)		(5.6)
Balance at September 30, 2024	531.0		391.6		869.6		93.7		413.4		102.8
Net liability for future policy benefits	304.2		140.3		800.6		60.3		223.4		102.8
Less: Reinsurance recoverable	(63.8)		(20.2)		(1.0)		(1.3)		(4.2)		(3.7)
Net liability for future policy benefits, after reinsurance recoverable	240.4		120.1		799.6		59.0		219.2		99.1
Impact of flooring on net liability for future policy benefits	—		—		—		—		0.1		—
Net liability for future policy benefits at September 30, 2024	$	240.4	$	120.1	$	799.6	$	59.0	$	219.3	$	99.1

(1) Experience Life contains both whole life and term elements.

(2) As of September 30, 2024, the net LFPB for Supplemental Health was $110.7 million for cancer, $20.9 million for accident, $26.6 million for disability and $120.4 million for other supplemental health policies.

(3) Issuances are calculated at present value, using the original discount rate, of the expected net premiums or the expected future policy benefits related to new policies issued during the current period.

(4) Interest accruals represent the interest earned on the beginning present value of either the expected net premiums or the expected future policy benefits using the original interest rate.

(5) Net premiums collected represent the product of the current period net premium ratio and the gross premiums collected during the period of in force business.

(6) Benefit payments represent the release of the present value, using the original discount rate, of the expected future policy benefits due to death, lapse/withdrawal and maturity payments based on revised expected assumptions.


Horace Mann Educators Corporation			20			Third Quarter 2024 Form 10-Q

NOTE 5 - Long-Duration Insurance Contracts (continued)

The balances of and changes in LFPB as of and for the nine months ended September 30, 2024 were as follows:


($ in millions)
	Whole Life		Term Life		Experience Life(1)		Limited-Pay Whole Life		Supplemental Health(2)		SPIA (life contingent)
Present value of expected net premiums:
Balance at January 1, 2024	$	223.2	$	240.0	$	71.7	$	32.2	$	182.0	$	—
January 1, 2024 balance at original discount rate	247.1		256.6		67.0		33.9		213.4		—
Effect of:
Change in cash flow assumptions	—		—		—		—		—		—
Actual variances from expected experience	2.0		0.3		(0.6)		(0.1)		3.1		—
Adjusted balance at January 1, 2024	249.1		256.9		66.4		33.8		216.5		—
Issuances(3)	8.8		18.4		—		3.1		14.7		2.2
Interest accruals(4)	5.6		8.0		2.8		1.0		5.1		—
Net premiums collected(5)	(15.8)		(19.0)		(5.0)		(3.4)		(18.1)		(2.2)
September 30, 2024 balance at original discount rate	247.7		264.3		64.2		34.5		218.2		—
Effect of changes in discount rate assumptions	(20.9)		(13.1)		4.8		(1.2)		(28.3)		—
Balance at September 30, 2024	226.8		251.2		69.0		33.3		189.9		—

Present value of expected future policy benefits:
Balance at January 1, 2024	522.0		370.1		883.0		89.6		427.6		104.2
January 1, 2024 balance at original discount rate	592.1		405.4		797.5		105.6		517.9		111.4
Effect of:
Changes in cash flow assumptions	—		—		—		—		—		—
Actual variances from expected experience	2.1		0.7		(0.6)		(0.1)		2.7		0.2
Adjusted balance at January 1, 2024	594.2		406.1		796.9		105.5		520.6		111.6
Issuances	8.7		18.6		—		3.0		14.8		2.2
Interest accruals	14.7		11.9		35.1		3.1		10.9		3.2
Benefit payments(6)	(17.7)		(14.4)		(47.0)		(1.5)		(48.9)		(8.6)
September 30, 2024 balance at original discount rate	599.9		422.2		785.0		110.1		497.4		108.4
Effect of changes in discount rate assumptions	(68.9)		(30.6)		84.6		(16.4)		(84.0)		(5.6)
Balance at September 30, 2024	531.0		391.6		869.6		93.7		413.4		102.8
Net liability for future policy benefits	304.2		140.3		800.6		60.3		223.4		102.8
Less: Reinsurance recoverable	(63.8)		(20.2)		(1.0)		(1.3)		(4.2)		(3.7)
Net liability for future policy benefits, after reinsurance recoverable	240.4		120.1		799.6		59.0		219.2		99.1
Impact of flooring on net liability for future policy benefits	—		—		—		—		0.1		—
Net liability for future policy benefits at September 30, 2024	$	240.4	$	120.1	$	799.6	$	59.0	$	219.3	$	99.1

(1) Experience Life contains both whole life and term elements.

(4) Interest accruals represent the interest earned on the beginning present value of either the expected net premiums or the expected future policy benefits using the original interest rate.

(5) Net premiums collected represent the product of the current period net premium ratio and the gross premiums collected during the period of in force business.


Horace Mann Educators Corporation			21			Third Quarter 2024 Form 10-Q

NOTE 5 - Long-Duration Insurance Contracts (continued)

The balances of and changes in LFPB as of and for the year ended December 31, 2023 were as follows:


($ in millions)
	Whole Life		Term Life		Experience Life(1)		Limited-Pay Whole Life		Supplemental Health(2)		SPIA (life contingent)
Present value of expected net premiums:
Balance at January 1, 2023	$	215.1	$	234.7	$	68.3	$	29.7	$	167.4	$	—
January 1, 2023 balance at original discount rate	245.9		265.4		65.5		32.4		205.1		—
Effect of:
Change in cash flow assumptions	—		(16.8)		3.7		(0.2)		6.5		—
Actual variances from expected experience	3.8		(2.7)		0.7		1.0		(1.6)		—
Adjusted balance at January 1, 2023	249.7		245.9		69.9		33.2		210.0		—
Issuances(3)	10.8		25.2		—		4.3		19.4		5.6
Interest accruals(4)	7.2		10.3		3.7		1.2		6.0		—
Net premiums collected(5)	(20.6)		(24.8)		(6.6)		(4.8)		(22.0)		(5.6)
December 31, 2023 balance at original discount rate	247.1		256.6		67.0		33.9		213.4		—
Effect of changes in discount rate assumptions	(23.9)		(16.6)		4.7		(1.7)		(31.4)		—
Balance at December 31, 2023	223.2		240.0		71.7		32.2		182.0		—

Present value of expected future policy benefits:
Balance at January 1, 2023	493.6		347.0		867.5		79.4		431.7		103.3
January 1, 2023 balance at original discount rate	581.9		401.0		805.2		98.6		537.1		113.4
Effect of:
Changes in cash flow assumptions	(0.6)		(16.7)		5.0		(0.2)		8.9		—
Actual variances from expected experience	4.0		1.3		1.1		1.0		(2.4)		(0.8)
Adjusted balance at January 1, 2023	585.3		385.6		811.3		99.4		543.6		112.6
Issuances	10.7		25.8		—		4.3		19.4		6.3
Interest accruals	19.0		15.2		47.4		3.9		14.4		4.4
Benefit payments(6)	(22.9)		(21.2)		(61.2)		(2.0)		(59.5)		(11.9)
December 31, 2023 balance at original discount rate	592.1		405.4		797.5		105.6		517.9		111.4
Effect of changes in discount rate assumptions	(70.1)		(35.3)		85.5		(16.0)		(90.3)		(7.2)
Balance at December 31, 2023	522.0		370.1		883.0		89.6		427.6		104.2
Net liability for future policy benefits	298.8		130.2		811.3		57.4		245.6		104.2
Less: Reinsurance recoverable	(64.3)		(19.1)		(1.0)		(1.2)		(4.0)		(3.6)
Net liability for future policy benefits, after reinsurance recoverable	234.5		111.1		810.3		56.2		241.6		100.6
Impact of flooring on net liability for future policy benefits	—		—		—		—		—		—
Net liability for future policy benefits at December 31, 2023	$	234.5	$	111.1	$	810.3	$	56.2	$	241.6	$	100.6

(1) Experience Life contains both whole life and term elements.

(2) As of December 31, 2023, the net LFPB for Supplemental Health was $92.7 million for cancer, $21.4 million for accident, $23.5 million for disability and $104.0 million for other supplemental health policies.

(4) Interest accruals represent the interest earned on the beginning present value of either the expected net premiums or the expected future policy benefits using the original interest rate.

(5) Net premiums collected represent the product of the current period net premium ratio and the gross premiums collected during the period of in force business.


Horace Mann Educators Corporation			22			Third Quarter 2024 Form 10-Q

NOTE 5 - Long-Duration Insurance Contracts (continued)

The following table reconciles the net LFPB to LFPB in the Consolidated Balance Sheets. DPL for single premium and immediate annuity products is presented together with LFPB in the Consolidated Balance Sheets:


($ in millions)	September 30, 2024		December 31, 2023
Whole life	$	304.2	$	298.8
Term life	140.3		130.2
Experience life	800.6		811.3
Limited-pay whole life	60.3		57.4
Supplemental health	223.4		245.6
SPIA (life contingent)	102.8		104.2
Limited-pay whole life DPL	4.7		4.1
SPIA (life contingent) DPL	1.4		1.3
Reconciling items(1)	107.8		108.9
Total	$	1,745.5	$	1,761.8

(1) Reconciling items primarily relate to products not in scope of ASU 2018-12 and return of premium reserves.

The following table summarizes the amount of revenue and interest related to traditional and limited-payment contracts recognized in the Consolidated Statements of Operations and Comprehensive Income (Loss):


($ in millions)	Gross premiums or assessments				Gross premiums or assessments
	Three Months Ended September 30,				Nine Months Ended September 30,
	2024		2023		2024		2023
Whole life	$	7.1	$	7.2	$	20.9	$	20.5
Term life	11.1		11.7		33.3		33.9
Experience life	8.5		8.1		23.9		24.2
Limited-pay whole life	1.8		2.2		5.2		5.5
Supplemental health	30.3		30.0		90.7		89.7
SPIA (life contingent)	1.3		0.9		3.0		4.5
Total	$	60.1	$	60.1	$	177.0	$	178.3


($ in millions)	Interest expense				Interest expense
	Three Months Ended September 30,				Nine Months Ended September 30,
	2024		2023		2024		2023
Whole life	$	3.1	$	3.0	$	9.1	$	8.8
Term life	1.4		1.2		4.0		3.6
Experience life	10.7		10.9		32.3		32.8
Limited-pay whole life	0.7		0.6		2.1		1.9
Supplemental health	1.9		2.1		5.8		6.4
SPIA (life contingent)	1.0		1.1		3.2		3.3
Total	$	18.8	$	18.9	$	56.5	$	56.8


Horace Mann Educators Corporation			23			Third Quarter 2024 Form 10-Q

NOTE 5 - Long-Duration Insurance Contracts (continued)

The following table provides the amount of undiscounted and discounted expected gross premiums and expected future benefits and expenses for traditional and limited-payment contracts:


($ in millions)	As of September 30, 2024				As of December 31, 2023
	Undiscounted		Discounted		Undiscounted		Discounted
Whole life
Expected future gross premiums	$	476.3	$	328.6	$	478.8	$	325.0
Expected future benefits and expenses	1,160.3		599.9		1,152.8		592.1
Term life
Expected future gross premiums	708.5		458.9		689.0		449.4
Expected future benefits and expenses	717.4		422.2		682.7		405.4
Experience Life
Expected future gross premiums	504.0		282.9		530.0		296.1
Expected future benefits and expenses	1,654.6		785.0		1,703.1		797.5
Limited-pay whole life
Expected future gross premiums	67.8		51.1		64.7		49.1
Expected future benefits and expenses	256.8		110.1		244.9		105.6
Supplemental health
Expected future gross premiums	1,625.9		1,186.4		1,624.1		1,192.5
Expected future benefits and expenses	704.1		497.3		719.4		517.9
SPIA (life contingent)
Expected future gross premiums	—		—		—		—
Expected future benefits and expenses	152.3		108.4		156.1		111.4

For the nine months ended September 30, 2024 and for the year ended December 31, 2023, net premiums exceeded gross premiums for several cohorts in the Whole Life and Term Life product lines. This resulted in an immaterial change to current period benefit expense for both periods.

The following table summarizes the ranges of actual experience and expected experience for mortality and lapses of LFPB:


	September 30, 2024
	Whole Life		Term Life	Experience Life		Limited-Pay Whole Life		Supplemental Health		SPIA (life contingent)
Mortality / Morbidity
Actual experience	0.7	%	0.1% - 0.3%	1.9	%	0.2	%	33.9	%	N.M.
Expected experience	0.8	%	0.1% - 0.8%	1.7	%	0.3	%	26.3	%	N.M.
Lapses
Actual experience	3.0	%	3.7% - 28.6%	2.9	%	3.9	%	9.3	%	N.M.
Expected experience	4.4	%	5.4% - 12.8%	3.0	%	4.7	%	9.7	%	N.M.

	September 30, 2023
	Whole Life		Term Life	Experience Life		Limited-Pay Whole Life		Supplemental Health		SPIA (life contingent)
Mortality / Morbidity
Actual experience	0.7	%	0.1% - 0.6%	1.7	%	0.1	%	31.9	%	N.M.
Expected experience	0.7	%	0.1% - 1.7%	1.6	%	0.3	%	26.0	%	N.M.
Lapses
Actual experience	3.6	%	5.3% - 7.3%	3.2	%	4.3	%	8.4	%	N.M.
Expected experience	4.7	%	5.7% - 32.2%	3.1	%	5.3	%	9.2	%	N.M.


Horace Mann Educators Corporation			24			Third Quarter 2024 Form 10-Q

NOTE 5 - Long-Duration Insurance Contracts (continued)

The following table provides the weighted-average durations of LFPB, in years:


	As of September 30,
	2024	2023
Whole life	17.7	17.8
Term life	16.4	16.4
Experience life	10.2	10.4
Limited-pay whole life	21.5	22.2
Supplemental health	11.3	10.3
SPIA (life contingent)	8.0	7.6

The following table provides ranges of the weighted-average interest rates for LFPB:


	As of September 30,
	2024		2023
Whole life
Interest accretion rate	1.7% - 4.9%		1.7% - 4.9%
Current discount rate	4.2% - 5.1%		5.5% - 5.9%
Term life
Interest accretion rate	4.2% - 4.2%		4.2% - 4.3%
Current discount rate	4.8% - 4.9%		5.9% - 5.9%
Experience life
Interest accretion rate	6.1	%	6.1	%
Current discount rate	5.0	%	5.9	%
Limited-pay whole life
Interest accretion rate	4.0	%	3.9	%
Current discount rate	5.2	%	5.9	%
Supplemental health
Interest accretion rate	1.7% - 2.7%		1.7% - 2.7%
Current discount rate	5.2% - 5.0%		5.9% - 6.1%
SPIA (life contingent)
Interest accretion rate	1.7% - 4.1%		1.7% - 4.1%
Current discount rate	4.8% - 4.8%		5.8% - 5.8%


Horace Mann Educators Corporation			25			Third Quarter 2024 Form 10-Q

NOTE 5 - Long-Duration Insurance Contracts (continued)

Liability for Policyholders' Account Balances

The Company recognizes a liability for policyholders' account balances. The following tables summarize balances of and changes in policyholders' account balances:


($ in millions)	Three Months Ended September 30, 2024
	Indexed Universal Life			Experience Life			Fixed Account Annuities			Fixed Indexed Account Annuities			SPIA (non-life contingent)
Balance at July 1, 2024	$	65.2		$	59.4		$	4,509.5		$	426.6		$	30.4
Premiums received(1)	$	3.5		$	(0.2)		$	59.8		$	3.7		$	0.5
Surrenders and withdrawals(2)	(0.9)			(0.8)			(85.3)			(12.1)			—
Benefit payments(3)	—			(0.3)			(12.6)			(1.7)			(1.2)
Net transfers from (to) separate account	(0.2)			—			8.8			(0.6)			—
Interest credited(4)	0.6			0.7			42.1			2.9			0.2
Other	(0.8)			—			3.3			(5.2)			0.2
Balance at September 30, 2024	$	67.4		$	58.8		$	4,525.6		$	413.6		$	30.1
Weighted-average crediting rate	3.7		%	4.9		%	3.8		%	2.8		%	2.7		%
Net amount at risk(5)	$	—		$	—		$	29.0		$	—		$	—
Cash surrender value	$	49.1		$	58.2		$	4,483.6		$	406.9		$	29.6

($ in millions)	Three Months Ended September 30, 2023
	Indexed Universal Life			Experience Life			Fixed Account Annuities			Fixed Indexed Account Annuities			SPIA (non-life contingent)
Balance at July 1, 2023	$	52.0		$	63.0		$	4,563.5		$	481.2		$	33.5
Premiums received(1)	$	3.1		$	(0.1)		$	70.0		$	5.3		$	0.5
Surrenders and withdrawals(2)	(0.2)			(1.1)			(87.8)			(17.6)			—
Benefit payments(3)	—			(0.4)			(21.2)			(0.6)			(1.2)
Net transfers from (to) separate account	(0.3)			—			3.0			(3.1)			—
Interest credited(4)	0.7			0.8			40.8			3.0			0.3
Other	(0.6)			(0.1)			0.2			(0.2)			—
Balance at September 30, 2023	$	54.7		$	62.1		$	4,568.5		$	468.0		$	33.1
Weighted-average crediting rate	5.4		%	5.2		%	3.6		%	2.6		%	3.7		%
Net amount at risk(5)	$	—		$	—		$	53.9		$	—		$	—
Cash surrender value	$	37.7		$	61.4		$	4,512.3		$	456.8		$	32.9

(1) Premiums received represents premiums collected from policyholder during the period of in force business.

(2) Surrenders and withdrawals represent reductions to the policyholders' account balance due to policyholders surrendering the policy or withdrawing funds from the account balance.

(3) Benefit payments represent benefits due under contract that were paid to a policyholder during the periods.

(4) Interest credited represents interest earned and credited to policyholders' account balance during the periods.

(5) Net amount at risk represents guaranteed benefit amounts less current policyholders' account balance at the reporting date.


Horace Mann Educators Corporation			26			Third Quarter 2024 Form 10-Q

NOTE 5 - Long-Duration Insurance Contracts (continued)


($ in millions)	Nine Months Ended September 30, 2024
	Indexed Universal Life			Experience Life			Fixed Account Annuities			Fixed Indexed Account Annuities			SPIA (non-life contingent)
Balance at January 1, 2024	$	57.8		$	61.2		$	4,556.0		$	449.0		$	32.6
Premiums received(1)	$	12.3		$	(0.5)		$	151.6		$	11.4		$	1.4
Surrenders and withdrawals(2)	(1.7)			(2.9)			(283.9)			(38.9)			(0.9)
Benefit payments(3)	—			(1.2)			(49.5)			(3.3)			(3.9)
Net transfers from (to) separate account	(0.3)			—			17.0			(2.0)			—
Interest credited(4)	2.2			2.2			125.1			8.8			0.7
Other	(2.9)			—			9.3			(11.4)			0.2
Balance at September 30, 2024	$	67.4		$	58.8		$	4,525.6		$	413.6		$	30.1
Weighted-average crediting rate	4.8		%	5.0		%	3.7		%	2.8		%	3.1		%
Net amount at risk(5)	$	—		$	—		$	29.0		$	—		$	—
Cash surrender value	$	49.1		$	58.2		$	4,483.6		$	406.9		$	29.6

($ in millions)	Nine Months Ended September 30, 2023
	Indexed Universal Life			Experience Life			Fixed Account Annuities			Fixed Indexed Account Annuities			SPIA (non-life contingent)
Balance at January 1, 2023	$	47.6		$	64.3		$	4,591.1		$	510.3		$	34.4
Premiums received(1)	$	9.8		$	(0.5)		$	183.9		$	15.8		$	2.6
Surrenders and withdrawals(2)	(0.9)			(2.6)			(289.8)			(50.1)			(0.2)
Benefit payments(3)	—			(1.3)			(58.1)			(2.1)			(4.3)
Net transfers from (to) separate account	(0.5)			—			17.5			(6.4)			—
Interest credited(4)	0.9			2.3			120.7			3.9			0.8
Other	(2.2)			(0.1)			3.2			(3.4)			(0.2)
Balance at September 30, 2023	$	54.7		$	62.1		$	4,568.5		$	468.0		$	33.1
Weighted-average crediting rate	2.3		%	5.0		%	3.6		%	1.1		%	3.1		%
Net amount at risk(5)	$	—		$	—		$	53.9		$	—		$	—
Cash surrender value	$	37.7		$	61.4		$	4,512.3		$	456.8		$	32.9

(1) Premiums received represents premiums collected from policyholder during the period of in force business.

(2) Surrenders and withdrawals represent reductions to the policyholders' account balance due to policyholders surrendering the policy or withdrawing funds from the account balance.

(3) Benefit payments represent benefits due under contract that were paid to a policyholder during the periods.

(4) Interest credited represents interest earned and credited to policyholders' account balance during the periods.

(5) Net amount at risk represents guaranteed benefit amounts less current policyholders' account balance at the reporting date.

The following table reconciles policyholders' account balances to the policyholders' account balance liability in the Consolidated Balances Sheets:


($ in millions)	September 30, 2024		December 31, 2023
Indexed universal life	$	67.4	$	57.8
Experience Life	58.8		61.2
Fixed account annuities	4,525.6		4,556.0
Fixed indexed account annuities	413.6		449.0
SPIA (non-life contingent)	30.1		32.6
Reconciling items(1)	33.1		30.4
Total	$	5,128.6	$	5,187.0

(1) Reconciling items primarily relate to FIA reserves net of account balances, miscellaneous fixed annuity reserves, personal promise accounts and MRBs.


Horace Mann Educators Corporation			27			Third Quarter 2024 Form 10-Q

NOTE 5 - Long-Duration Insurance Contracts (continued)

The following tables present the gross account values by range of guaranteed minimum crediting rates and the related range of difference, in basis points, between rates being credited to policyholders and the respective guaranteed minimums:


($ in millions)	September 30, 2024
	At Guaranteed Minimum		1-50 Basis Points Above		51-150 Basis Points Above		Greater Than 150 Basis Points Above		Total(1)
Guaranteed minimum crediting rates:
Less than 2%	$	18.1	$	88.6	$	444.2	$	270.9	$	821.8
Equal to 2% but less than 3%	111.5		116.2		90.0		133.9		451.6
Equal to 3% but less than 4%	539.8		42.1		8.1		25.4		615.5
Equal to 4% but less than 5%	2,629.0		—		—		—		2,629.0
5% or higher	83.4		—		—		—		83.4
Total	$	3,381.8	$	246.9	$	542.3	$	430.2	$	4,601.3

($ in millions)	December 31, 2023
	At Guaranteed Minimum		1-50 Basis Points Above		51-150 Basis Points Above		Greater Than 150 Basis Points Above		Total(1)
Guaranteed minimum crediting rates:
Less than 2%	$	36.7	$	159.8	$	489.4	$	200.2	$	886.1
Equal to 2% but less than 3%	162.9		77.9		65.8		76.1		382.7
Equal to 3% but less than 4%	571.3		36.9		0.7		—		609.0
Equal to 4% but less than 5%	2,670.5		—		—		—		2,670.5
5% or higher	86.9		—		—		—		86.9
Total	$	3,528.3	$	274.6	$	555.9	$	276.3	$	4,635.2

(1) Excludes products not containing a fixed guaranteed minimum crediting rate.

Separate Account Liabilities

Separate account assets and liabilities consist of investment accounts established and maintained by the Company for certain variable contracts. Some of these variable contracts include minimum guarantees such as GMDBs that guarantee a minimum payment to the policyholder in the event of death.

The assets that support variable contracts are measured at fair value and are reported as separate account assets on the Consolidated Balance Sheets. An equivalent amount is reported as separate account liabilities. MRB assets and liabilities for minimum guarantees are valued and presented separately from separate account assets and separate account liabilities. MRBs are discussed further in the market risk benefits section of this Note to the Consolidated Financial Statements. Policy charges assessed against the policyholders for mortality, administration and other services are included in the life premiums and contract charges line item on the Consolidated Statements of Operations and Comprehensive Income (Loss).


Horace Mann Educators Corporation			28			Third Quarter 2024 Form 10-Q

NOTE 5 - Long-Duration Insurance Contracts (continued)

The following table presents the balances of and changes in the Separate Account variable annuity liabilities presented in the Consolidated Balance Sheets(1):


($ in millions)	Retirement Services
	Variable Account Annuities
	September 30, 2024		December 31, 2023
Balance, beginning of year	$	3,294.1	$	2,792.3
Deposits	195.1		234.2
Withdrawals	(210.9)		(213.4)
Net transfers	(15.0)		(15.5)
Fees and charges	(39.0)		(37.6)
Market appreciation (depreciation)	508.5		541.5
Other	—		(7.4)
Balance, end of period	$	3,732.8	$	3,294.1

(1) The Separate Account variable annuity liabilities are backed by, and are equal to, the Separate Account variable annuity assets that represent contractholder funds invested in various actively traded mutual funds that have daily quoted net asset values that are readily determinable for identical assets that the Company can access.

Market Risk Benefits

The following table presents the balances of and changes in MRBs associated with deferred variable annuities as of and for the three and nine months ended September 30, 2024 and 2023, respectively:


($ in millions)	Three Months Ended September 30,				Nine Months Ended September 30,
	2024		2023		2024		2023

Balance, beginning of period	$	(6.2)	$	(3.6)	$	(3.9)	$	0.2
Balance, beginning of period, before effects of changes in the instrument-specific credit risk	(6.8)		(3.2)		(4.5)		—
Changes in market risk benefits(1)	0.3		(1.3)		(2.0)		(4.5)
Balance, end of period(2)	$	(6.5)	$	(4.5)	$	(6.5)	$	(4.5)
Effect of changes in the instrument-specific credit risk	0.8		—		0.8		—
Balance, end of period	$	(5.7)	$	(4.5)	$	(5.7)	$	(4.5)
Net amount at risk(3)	$	15.1	$	37.6	$	15.1	$	37.6
Weighted-average attained age of contract holders	62		63		62		63

(1) Reflects interest accruals and effect of changes in interest rates, equity markets, equity index volatility and future assumptions.

(2) Balance, end of period, before the effect of changes in the instrument-specific credit risk.

(3) Net amount at risk represents the current guaranteed benefit less current account balance at the reporting date.

The following table presents MRBs by amounts in an asset position and amounts in a liability position. The net liabilities (assets) are included in Policyholders' account balances presented in the Consolidated Balance Sheets.


($ in millions)	As of September 30, 2024						As of December 31, 2023
	(Asset)		Liability		Net		(Asset)		Liability		Net
Deferred variable annuities	$	(8.5)	$	2.9	$	(5.7)	$	(6.7)	$	2.8	$	(3.9)


Horace Mann Educators Corporation			29			Third Quarter 2024 Form 10-Q

NOTE 5 - Long-Duration Insurance Contracts (continued)

Deferred Acquisition Costs

The following tables roll-forward DAC for the periods indicated:


($ in millions)	Three Months Ended September 30, 2024
	Whole Life		Term Life		Experience Life		Limited-Pay Whole Life		Indexed Universal Life		Supplemental Health		Total Annuities
Balance, beginning of period	$	23.0	$	33.5	$	5.6	$	7.7	$	17.8	$	9.3	$	212.4
Capitalizations	0.8		1.2		0.1		0.3		0.8		0.8		3.9
Amortization expense	(0.4)		(0.9)		(0.1)		(0.1)		(0.3)		(0.2)		(4.1)
Experience adjustment	—		—		—		(0.1)		—		—		(0.2)
Balance, end of period	$	23.4	$	33.8	$	5.6	$	7.8	$	18.3	$	9.9	$	212.0

($ in millions)	Nine Months Ended September 30, 2024
	Whole Life		Term Life		Experience Life		Limited-Pay Whole Life		Indexed Universal Life		Supplemental Health		Total Annuities
Balance, beginning of period	$	22.3	$	32.6	$	5.7	$	7.4	$	16.8	$	8.2	$	214.0
Capitalizations	2.2		3.8		0.2		0.8		2.4		2.4		11.9
Amortization expense	(1.0)		(2.6)		(0.3)		(0.3)		(0.8)		(0.6)		(12.0)
Experience adjustment	(0.1)		—		—		(0.1)		(0.1)		(0.1)		(1.9)
Balance, end of period	$	23.4	$	33.8	$	5.6	$	7.8	$	18.3	$	9.9	$	212.0

The following table presents a reconciliation of DAC to the Consolidated Balance Sheets:


($ in millions)	September 30, 2024		December 31, 2023
Whole life	$	23.4	$	22.3
Term life	33.8		32.6
Experience life	5.6		5.7
Limited pay whole life	7.8		7.4
Indexed universal life	18.3		16.8
Supplemental health	9.9		8.2
Total annuities	212.0		214.0
Reconciling item(1)	34.6		29.3
Total	$	345.4	$	336.3

(1) Reconciling item relates to DAC associated with the Property & Casualty reporting segment.

The assumptions used to amortize DAC were consistent with the assumptions used to estimate LFPB for traditional and limited-payment contracts. The underlying assumptions for DAC and LFPB were updated at the same time.

In the third quarter of 2024 and 2023, the Company conducted a review of all significant assumptions and did not make any changes to future assumptions because actual experience for mortality and lapses was materially consistent with underlying assumptions.


Horace Mann Educators Corporation			30			Third Quarter 2024 Form 10-Q

NOTE 6 - Reinsurance

The Company recognizes the cost of reinsurance premiums over the contract periods for such premiums in proportion to the insurance protection provided. Amounts recoverable from reinsurers for unpaid claims and claim settlement expenses, including estimated amounts for unsettled claims, claims incurred but not yet reported and policy benefits, are estimated in a manner consistent with the insurance liability associated with the policy. The effects of reinsurance on net premiums written and contract deposits; net premiums and contract charges earned; and benefits, claims and settlement expenses were as follows:


($ in millions)	Direct Amount		Ceded to Other Companies		Assumed from Other Companies		Net Amount
Three months ended September 30, 2024(1)
Net premiums written and contract deposits(2)	$	427.6	$	17.6	$	6.3	$	416.3
Net premiums and contract charges earned	296.0		13.1		6.2		289.1
Benefits, claims and settlement expenses	196.6		11.2		5.9		191.3

Three months ended September 30, 2023
Net premiums written and contract deposits(2)	$	424.0	$	16.5	$	8.4	$	415.9
Net premiums and contract charges earned	276.7		18.7		8.0		266.0
Benefits, claims and settlement expenses	205.2		9.1		3.1		199.2

Nine months ended September 30, 2024(1)
Net premiums written and contract deposits(2)	$	1,227.8	$	53.8	$	21.4	$	1,195.4
Net premiums and contract charges earned	877.1		52.7		20.8		845.2
Benefits, claims and settlement expenses	596.5		36.0		14.4		574.9

Nine months ended September 30, 2023
Net premiums written and contract deposits(2)	$	1,186.5	$	51.0	$	28.2	$	1,163.7
Net premiums and contract charges earned	812.3		57.2		27.5		782.6
Benefits, claims and settlement expenses	615.6		36.1		8.1		587.6

(1) Direct amount is net of the annuity reinsurance transaction accounted for using the deposit method.

(2) This measure is not based on accounting principles generally accepted in the United States of America (non-GAAP). An explanation of this non-GAAP measure is contained in the Glossary of Selected Terms included as Exhibit 99.1 in the Company's reports filed with the SEC.


Horace Mann Educators Corporation			31			Third Quarter 2024 Form 10-Q

NOTE 7 - Segment Information

The Company conducts and manages its business in four reporting segments. The three operating segments, representing the major lines of business, are: (1) Property & Casualty (primarily personal lines of auto and property insurance products), (2) Life & Retirement (primarily tax-qualified fixed and variable annuities as well as life insurance products), and (3) Supplemental & Group Benefits (primarily cancer, heart, hospital, supplemental disability, accident, short-term and long-term group disability, and group term life coverages). The Company does not allocate the impact of corporate-level transactions to these operating segments, consistent with the basis for management's evaluation of the results of those segments, but classifies those items in the fourth reporting segment, Corporate & Other. In addition to ongoing transactions such as corporate debt service, net investment gains (losses) and certain public company expenses, such items in Corporate & Other have also included corporate debt retirement costs, when applicable.

Summarized financial information for these segments is as follows:


($ in millions)	Three Months Ended September 30,				Nine Months Ended September 30,
	2024		2023		2024		2023
Net premiums and contract charges earned
Property & Casualty	$	187.3	$	164.3	$	539.7	$	474.1
Life & Retirement	39.1		38.2		114.9		113.3
Supplemental & Group Benefits	62.7		63.5		190.6		195.2
Total	$	289.1	$	266.0	$	845.2	$	782.6

Net investment income
Property & Casualty	$	8.8	$	12.0	$	30.6	$	26.6
Life & Retirement	94.6		96.9		269.3		274.1
Supplemental & Group Benefits	10.1		10.3		28.4		28.5
Corporate & Other	0.1		0.2		0.1		0.2
Intersegment eliminations	(0.6)		(0.5)		(1.6)		(1.6)
Total	$	113.0	$	118.9	$	326.8	$	327.8

Net income (loss)
Property & Casualty	$	10.6	$	(11.3)	$	12.6	$	(44.3)
Life & Retirement	14.8		20.9		38.8		52.3
Supplemental & Group Benefits	14.8		15.8		39.9		41.6
Corporate & Other	(5.9)		(13.7)		(26.7)		(44.1)
Total	$	34.3	$	11.7	$	64.6	$	5.5


($ in millions)	September 30, 2024		December 31, 2023
Assets
Property & Casualty	$	1,327.0	$	1,218.1
Life & Retirement	11,893.3		11,365.0
Supplemental & Group Benefits	1,395.0		1,338.8
Corporate & Other	184.8		190.4
Intersegment eliminations	(86.5)		(62.4)
Total	$	14,713.6	$	14,049.9


Horace Mann Educators Corporation			32			Third Quarter 2024 Form 10-Q

NOTE 8 - Accumulated Other Comprehensive Income (Loss)

AOCI represents the accumulated change in shareholders’ equity from transactions and other events and circumstances from non-shareholder sources. For the Company, AOCI includes the after tax change in net unrealized investment gains (losses) on fixed maturity securities, the after tax change in net reserve remeasurements attributable to discount rates and the after tax change in net funded status of benefit plans for the periods as shown in the Consolidated Statements of Changes in Shareholders’ Equity. The following table reconciles these components.


($ in millions)	Net Unrealized Investment Gains (Losses) on Fixed Maturity Securities(1)		Net Reserve Remeasurements Attributable to Discount Rates(1)		Net Funded Status of Benefit Plans(1)		Total(1)
Beginning balance, July 1, 2024	$	(370.4)	$	95.3	$	(7.6)	$	(282.7)
Other comprehensive income (loss) before reclassifications	132.8		(73.5)		—		59.3
Amounts reclassified from AOCI(2)	0.4		—		—		0.4
Net current period other comprehensive income (loss)	133.2		(73.5)		—		59.7
Ending balance, September 30, 2024	$	(237.2)	$	21.8	$	(7.6)	$	(223.0)

Beginning balance, July 1, 2023	$	(393.7)	$	42.9	$	(8.8)	$	(359.6)
Other comprehensive income (loss) before reclassifications	(143.7)		90.7		—		(53.0)
Amounts reclassified from AOCI(3)	2.7		—		—		2.7
Net current period other comprehensive income (loss)	(141.0)		90.7		—		(50.3)
Ending balance, September 30, 2023	$	(534.7)	$	133.6	$	(8.8)	$	(409.9)

Beginning balance, January 1, 2024	$	(328.3)	$	21.9	$	(7.6)	$	(314.0)
Other comprehensive income (loss) before reclassifications	88.2		(0.1)		—		88.1
Amounts reclassified from AOCI(2)	2.9		—		—		2.9
Net current period other comprehensive income (loss)	91.1		(0.1)		—		91.0
Ending balance, September 30, 2024	$	(237.2)	$	21.8	$	(7.6)	$	(223.0)

Beginning balance, January 1, 2023	$	(449.6)	$	59.0	$	(8.8)	$	(399.4)
Other comprehensive income (loss) before reclassifications	(101.3)		74.6		—		(26.7)
Amounts reclassified from AOCI(3)	16.2		—		—		16.2
Net current period other comprehensive income (loss)	(85.1)		74.6		—		(10.5)
Ending balance, September 30, 2023	$	(534.7)	$	133.6	$	(8.8)	$	(409.9)

(1)All amounts are net of tax.

(2)The pretax amounts reclassified from AOCI, $(0.4) million and $(3.6) million, are included in Net investment gains (losses) and the related income tax benefits, $(0.1) million and $(0.8) million, are included in income tax expense in the Consolidated Statements of Operations for the three and nine months ended September 30, 2024, respectively.

(3)The pretax amounts reclassified from AOCI, $(3.5) million and $(20.5) million, are included in Net investment gains (losses) and the related income tax benefits, $(0.7) million and $(4.3) million, are included in income tax expense in the Consolidated Statements of Operations for the three and nine months ended September 30, 2023, respectively.

Comparative information for elements that are not required to be reclassified in their entirety to net income (loss) in the same reporting period is disclosed in Note 2.


Horace Mann Educators Corporation			33			Third Quarter 2024 Form 10-Q

NOTE 9 - Supplemental Consolidated Cash and Cash Flow Information


($ in millions)
	September 30, 2024		December 31, 2023
Cash	$	39.4	$	29.0
Restricted cash	0.4		0.7
Total cash and restricted cash reported in the Consolidated Balance Sheets	$	39.8	$	29.7


($ in millions)	Nine Months Ended September 30,
	2024		2023
Cash paid for:
Interest	$	25.1	$	18.3
Income taxes	20.1		14.8

Non-cash activities were not material for the three and nine months ended September 30, 2024 and 2023, respectively.

NOTE 10 - Contingencies and Commitments

Lawsuits and Legal Proceedings

Companies in the insurance industry have been subject to substantial litigation resulting from claims, disputes and other matters. For instance, they have faced expensive claims, including class action lawsuits, alleging, among other things, improper sales practices and improper claims settlement procedures. Negotiated settlements of certain such actions have had a material adverse effect on many insurance companies. At the time of issuance of this Interim Report on Form 10-Q, except as noted below, the Company does not have pending litigation from which there is a reasonable possibility of material loss.

In 2023, the Horace Mann Insurance Company (HMIC) was named as a defendant in one lawsuit and received various demands for reimbursement and notices of claims related to legacy, long-tail commercial lines claims, including asbestos, environmental, and sexual molestation claims. It is alleged that HMIC reinsured certain commercial lines policies as a member of various insurance pooling arrangements in the late 1960s and early 1970s. The related policies were written prior to the 1975 acquisition of Horace Mann by INA discussed in Part I - Item 1 of the Annual Report on Form 10-K. HMEC’s available records indicate that on January 1, 1975, HMIC entered a quota share retrocession treaty with INA. It is the Company’s understanding that claims arising under these legacy policies were handled by various third parties pursuant to the terms of that treaty and its subsequent amendments entered into on behalf of HMIC. Ultimately, after amendments to the treaty and various corporate transactions involving the reinsurer, these obligations were assumed by companies that were affiliated with R&Q Reinsurance Company (R&Q).

The matters noted above arose following the March 23, 2023, Order of Liquidation in Pennsylvania of R&Q. HMIC is defending itself against the pending litigation and is in the process of investigating and evaluating the other demands and claims notices under a complete reservation of rights. In addition, in order to preserve its rights, HMIC submitted a proof of claim in the pending R&Q liquidation proceeding.

The amounts claimed against HMIC, if successful, could be material. However, based on the preliminary nature of the matters, the information available to date and considering the legal and factual challenges to the litigation and claims, it is not possible to provide a reasonable estimate of any resultant payment.

Investment Commitments

The Company has outstanding commitments to fund investments primarily in limited partnership interests. Such unfunded commitments were $467.0 million and $502.6 million as of September 30, 2024 and December 31, 2023, respectively.


Horace Mann Educators Corporation			34			Third Quarter 2024 Form 10-Q

ITEM 2. I Management's Discussion and Analysis of Financial Condition and Results of Operations (MD&A)

Introduction

The purpose of this MD&A is to provide an understanding of our consolidated results of operations and financial condition. This MD&A should be read in conjunction with the Consolidated Financial Statements and Notes thereto contained in Part I - Item 1 of this Quarterly Report on Form 10-Q.

Measures within this MD&A that are not based on accounting principles generally accepted in the United States of America (non-GAAP) are marked with an asterisk (*) the first time they are presented within this Part I - Item 2. An explanation of these measures is contained in the Glossary of Selected Terms included as Exhibit 99.1 to this Quarterly Report on Form 10-Q and are reconciled to the most directly comparable measures prepared in accordance with accounting principles generally accepted in the United States of America (GAAP) in the Appendix to the Company's Third Quarter 2024 Investor Supplement.

Increases or decreases in this MD&A that are not meaningful are marked "N.M.".

Statements made in this Quarterly Report on Form 10-Q 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 known and unknown risks, uncertainties and other factors. Horace Mann Educators Corporation (referred to in this Quarterly Report on Form 10-Q as "we", "our", "us", the "Company", "Horace Mann" or "HMEC") is an insurance holding company. We are not under any obligation to (and expressly disclaim any such obligation to) update or revise any forward-looking statements, whether as a result of new information, future events or otherwise. It is important to note that our actual results could differ materially from those projected in forward-looking statements due to a number of risks and uncertainties inherent in our business. Also, see Part I - Items 1 and 1A in our Annual Report on Form 10-K for the year ended December 31, 2023 for additional information regarding risks and uncertainties.

Corporate Strategy

Our vision is to be the company of choice to provide insurance and financial solutions for all educators and others who serve their communities, whether they engage with Horace Mann directly or through their district/employer. We believe the unique value of Horace Mann is providing solutions tailored for educators at each stage of their lives, empowering them to achieve lifelong financial success. Our motivation stems from our gratitude for educators: They are looking after our children's futures, and we believe they deserve someone to


Horace Mann Educators Corporation			35			Third Quarter 2024 Form 10-Q

look after theirs. Our commitment to having a positive impact on our customers' lives extends to all our corporate stakeholders, including employees, agents, investors and the communities where we live and work.

We conduct and manage our business in four reporting segments. The three reporting segments representing our major lines of business, are: (1) Property & Casualty (primarily personal lines of auto and property insurance products), (2) Life & Retirement (primarily tax-qualified fixed and variable annuities as well as life insurance products), and (3) Supplemental & Group Benefits (primarily cancer, heart, hospital, supplemental disability, accident, short-term and long-term group disability, and group term life coverages). We do not allocate the impact of corporate-level transactions to these reporting segments, consistent with the basis for management's evaluation of the results of those segments, but classify those items in the fourth reporting segment, Corporate & Other. In addition to ongoing transactions such as corporate debt service, net investment gains (losses) and certain public company expenses, such items also have included corporate debt retirement costs, when applicable. See Part I - Item 1, Note 7 of the Consolidated Financial Statements in this Quarterly Report on Form 10-Q for more information.

Consolidated Financial Highlights

(All comparisons vs. same periods in 2023, unless noted otherwise)


($ in millions)	Three Months Ended September 30,						2024-2023		Nine Months Ended September 30,						2024-2023
	2024			2023			% Change		2024			2023			% Change
Total revenues	$	412.1		$	378.7		8.8	%	$	1,186.2		$	1,089.0		8.9	%
Net income	34.3			11.7			193.2	%	64.6			5.5			1,074.5	%
Net Investment gains (losses), after tax	3.0			(6.6)			145.5	%	0.1			(23.4)			100.4	%
Per diluted share:
Net income	0.83			0.28			196.4	%	1.56			0.13			1,100.0	%
Net investment gains (losses), after tax	0.07			(0.16)			143.8	%	—			(0.57)			100.0	%
Book value per share									$	31.60		$	25.74		22.8	%
Net income return on equity - last twelve months	8.8		%	(1.0)		%	9.8	pts	8.8		%	(1.0		%)	9.8	pts
Net income return on equity - annualized	11.0		%	4.3		%	6.7	pts	7.0		%	0.7		%	6.3	pts

For the three and nine months ended September 30, 2024, net income increased $22.6 million and $59.1 million primarily due to improved Property & Casualty segment results reflecting the effect of rate and non-rate underwriting actions as well as the impact of favorable prior years' reserve development and lower net investment losses in Corporate & Other.


Horace Mann Educators Corporation			36			Third Quarter 2024 Form 10-Q

Consolidated Results of Operations

(All comparisons vs. same periods in 2023, unless noted otherwise)


($ in millions)	Three Months Ended September 30,				2024-2023		Nine Months Ended September 30,				2024-2023
	2024		2023		% Change		2024		2023		% Change
Net premiums and contract charges earned	$	289.1	$	266.0	8.7	%	$	845.2	$	782.6	8.0	%
Net investment income	113.0		118.9		-5.0	%	326.8		327.8		-0.3	%
Net investment gains (losses)	3.8		(8.4)		145.2	%	0.1		(29.7)		100.3	%
Other income	6.2		2.2		181.8	%	14.1		8.3		69.9	%
Total revenues	412.1		378.7		8.8	%	1,186.2		1,089.0		8.9	%

Benefits, claims and settlement expenses	191.3		199.2		-4.0	%	574.9		587.6		-2.2	%
Interest credited	54.8		52.7		4.0	%	161.5		152.1		6.2	%
Operating expenses	82.9		75.7		9.5	%	250.4		235.6		6.3	%
DAC amortization expense	28.1		26.3		6.8	%	82.1		75.4		8.9	%
Intangible asset amortization expense	3.6		3.7		-2.7	%	10.9		11.1		-1.8	%
Interest expense	8.7		7.5		16.0	%	26.1		21.1		23.7	%
Total benefits, losses and expenses	369.4		365.1		1.2	%	1,105.9		1,082.9		2.1	%

Income before income taxes	42.7		13.6		214.0	%	80.3		6.1		1,216.4	%
Income tax expense	8.4		1.9		342.1	%	15.7		0.6		2,516.7	%
Net income	$	34.3	$	11.7	193.2	%	$	64.6	$	5.5	1,074.5	%

Net Premiums and Contract Charges Earned

For the three and nine months ended September 30, 2024, net premiums and contract charges earned increased $23.1 million and $62.6 million, as the Property & Casualty segment continues to implement and earn in rate and other actions.

Net Investment Income

For the three and nine months ended September 30, 2024, total net investment income decreased $5.9 million and $1.0 million. The decrease for the quarter is primarily due to lower returns for our limited partnership interests while the nine month variance is due to lower returns in our commercial mortgage loan funds in the first half of the year. The annualized investment yield on the portfolio excluding limited partnership interests* was as follows:


	Three Months Ended September 30,		Nine Months Ended September 30,
	2024	2023	2024	2023
Investment yield, excluding limited partnership interests, pretax - annualized*	4.8%	4.5%	4.5%	4.6%
Investment yield, excluding limited partnership interests, after tax - annualized*	3.8%	3.6%	3.6%	3.7%

The higher investment yields, excluding limited partnership interests, for the three months ended September 30, 2024 reflected stronger income from the fixed income portfolios. The lower investment yield for nine months ended September 30, 2024 are due to commercial mortgage loan fund returns that were below historic averages in the first six months of 2024 significantly offset by the stronger income from the fixed income portfolio.

During the three and nine months ended September 30, 2024, we continued to identify and purchase investments with attractive risk-adjusted yields relative to market conditions without venturing into asset classes or individual securities that would be inconsistent with our overall investment guidelines for the core portfolio.


Horace Mann Educators Corporation			37			Third Quarter 2024 Form 10-Q

We continue to fund at levels that allow us to maintain our targeted allocation to commercial mortgage loan funds and limited partnership interests while maintaining balance between principal protection and risk.

Net Investment Gains (Losses)

For the three months ended September 30, 2024, total net investment losses decreased by $12.2 million. For the nine months ended, September 30, 2024, net investment losses decreased $29.8 million. The breakdown of net investment gains (losses) by transaction type were as follows:


($ in millions)	Three Months Ended September 30,				Nine Months Ended September 30,
	2024		2023		2024		2023
Credit loss and intent-to-sell impairments	$	(0.7)	$	(0.6)	$	(0.7)	$	(7.2)
Sales and other, net	0.1		(3.5)		(3.2)		(25.2)
Change in fair value - equity securities	5.2		(1.4)		5.7		5.3
Change in fair value and gains (losses) realized on settlements - derivatives	(0.8)		(2.9)		(1.7)		(2.6)
Net investment gains (losses)	$	3.8	$	(8.4)	$	0.1	$	(29.7)

From time to time, we may sell fixed maturity securities subsequent to the reporting date that were considered temporarily impaired at such reporting date. Such sales are due to issuer-specific events occurring subsequent to the reporting date that result in a change in our intent to sell a fixed maturity security.

Other Income

For the nine months ended September 30, 2024, other income increased $5.8 million, due to lower offsets compared to the prior year from an indemnification agreement associated with the employer-sponsored business line and the impact of strong financial markets on asset based fees.

Benefits, Claims and Settlement Expenses

Benefits, claims and settlement expenses declined $9.8 million for the three months ended September 30, 2024 as lower property & casualty underlying losses and recognition of favorable prior years' reserve development were partially offset by an increase in property catastrophe losses and life mortality. Benefits, claims and settlement expenses declined $12.7 million for the nine months ended September 30, 2024, primarily due to the impact of favorable property & casualty prior years' reserve development partially offset by an increase in life mortality.

Interest Credited

For the three and nine months ended September 30, 2024, interest credited increased $2.1 million and $9.4 driven primarily by higher credited rates on the retained annuity block along with higher interest rates on advances from the Federal Home Loan Bank of Chicago (FHLB). The net contribution from FHLB advances increased year over year as the higher interest credited rates were consistent with the higher earnings from the floating rate investments backing the program.

Under the deposit method of accounting, the interest credited on the reinsured annuity block continues to be reported. The average deferred annuity credited rate, excluding the reinsured annuity block, was 3.1% and 2.8% as of September 30, 2024 and September 30, 2023, respectively.

Operating Expenses

For the three and nine months ended September 30, 2024, operating expenses increased 9.5% and 6.3%, reflecting inflation and investments being made in infrastructure.

Deferred Policy Acquisition Costs (DAC) Amortization Expense

For the three and nine months ended September 30, 2024, DAC amortization expense increased $1.8 million and $6.7 million, primarily due to premium increases in the Property & Casualty segment driving higher DAC asset levels partially offset by lower levels of write-offs in the Life & Retirement segment as annuity persistency has been stable in the current year.


Horace Mann Educators Corporation			38			Third Quarter 2024 Form 10-Q

Intangible Asset Amortization Expense

For the three and nine months ended September 30, 2024, intangible asset amortization expense was flat.

Interest Expense

For the three and nine months ended September 30, 2024, interest expense increased $1.2 million and $5.0 million, due to an increase in the interest rate as well as an increase in the level of debt associated with the issuance of the 2023 Senior Notes.

Income Tax Expense

The effective income tax rate on our pretax income, including net investment gains (losses), was 19.6% and 9.8% for the nine months ended September 30, 2024 and 2023, respectively. Income from investments in tax-advantaged securities decreased the effective income tax rates by 2.8 and 35.0 percentage points for the nine months ended September 30, 2024 and 2023, respectively.

We record liabilities for uncertain tax filing positions where it is more likely than not that the position will not be sustainable upon audit by taxing authorities. These liabilities are reevaluated routinely and are adjusted appropriately based on changes in facts or law. We have no unrecorded liabilities from uncertain tax filing positions.

As of September 30, 2024, our federal income tax returns for years prior to 2020 are no longer subject to examination by the Internal Revenue Service. We do not anticipate any assessments for tax years that remain subject to examination to have a material effect on our financial position or results of operations.

Outlook for 2024

The following discussion provides forward-looking outlook information for our results of operations and capital position.

Consolidated Results

At the time of issuance of this Quarterly Report on Form 10-Q, we estimate that 2024 full year core earnings will be within a range of $2.40 to $2.70 per diluted share. This range is unchanged from the Outlook for 2024 we discussed in our Quarterly Report on Form 10-Q for the period ended June 30, 2024. These results anticipate the following:

•8% to 9% increase in net premiums and contract charges earned driven by Property & Casualty rate actions

•Net investment income in the range of $440 million to $450 million, which includes approximately $105 million of accreted investment income on the deposit asset on reinsurance in the Life & Retirement segment

•Approximately 6% increase in total Operating expense

•Approximately $35 million in corporate Interest expense included in results for the Corporate & Other segment

Property & Casualty Segment

In 2024, net income for Property & Casualty is anticipated to be in the range of $36 million to $39 million. Our outlook anticipates:

•Combined ratio near 100%

•Catastrophe loss assumption is now anticipated to be around 13% of net earned premiums

We continue to anticipate achieving a Property & Casualty combined ratio of 95-96% in 2025.


Horace Mann Educators Corporation			39			Third Quarter 2024 Form 10-Q

Life & Retirement Segment

In 2024, net income for Life & Retirement is estimated to be in the range of $50 million to $56 million. Our outlook anticipates:

•Spread on the fixed annuity business in the range of 180 to 190 basis points, below the target range of 220 to 230 basis points

•Mortality modestly higher than 2023

Supplemental & Group Benefits Segment

In 2024, net income for Supplemental & Group Benefits is anticipated to be in the range of $49 million to $52 million reflecting strong first-half performance. Our outlook anticipates:

•Claims utilization for supplemental and disability products increasing slightly from the first nine months of the year, leading to a segment benefit ratio closer to longer-term target of 43%

•Pretax profit on revenue of between 21% and 22%

As described in Application of Critical Accounting Estimates, certain of our significant accounting measurements require the use of estimates and assumptions. As additional information becomes available, adjustments may be required. Those adjustments are charged or credited to net income for the period in which the adjustments are made and may impact actual results compared to our estimates above. Additionally, see forward-looking information in this Quarterly Report on Form 10-Q as well as Part I - Items 1 and 1A in our Annual Report on Form 10-K for the year ended December 31, 2023 concerning other important factors that could impact actual results. Our projections due not include a forecast of net investment gains (losses), which can vary substantially from one period to another and may have a significant impact on net income.

Application of Critical Accounting Estimates

The preparation of consolidated financial statements in conformity with GAAP requires us to make estimates and assumptions based on information available at the time the consolidated financial statements are prepared. These estimates and assumptions affect the reported amounts of our consolidated assets, liabilities, shareholders' equity and net income. Certain accounting estimates are particularly sensitive because of their significance to our consolidated financial statements and because of the possibility that subsequent events and available information may differ markedly from management's judgments at the time the consolidated financial statements were prepared. We have discussed with the Audit Committee the quality, not just the acceptability, of our accounting principles as applied in our financial reporting. The discussions generally included such matters as the consistency of our accounting policies and their application, and the clarity and completeness of our consolidated financial statements, which include related disclosures.

Information regarding our accounting policies pertaining to these topics is located in the Notes to the Consolidated Financial Statements contained in Part II - Item 8 of our Annual Report on Form 10-K for the year ended December 31, 2023. In addition, discussion of accounting policies, including certain sensitivity information, was presented in Management's Discussion and Analysis of Financial Condition and Results of Operations - Application of Critical Accounting Estimates in that Form 10-K within which we identified the following accounting estimates as critical in that they involve a higher degree of judgment and are subject to a significant degree of variability:

•Valuation of hard-to-value fixed maturity securities

•Evaluation of credit loss impairments for fixed maturity securities

•Valuation of future policy benefit reserves

•Valuation of liabilities for property and casualty unpaid claims and claim expense reserves

Compared to December 31, 2023, as of September 30, 2024, there were no material changes to accounting policies for areas most subject to significant management judgments identified above.


Horace Mann Educators Corporation			40			Third Quarter 2024 Form 10-Q

Results of Operations by Segment

Consolidated financial results reflect the results of the Property & Casualty, Life & Retirement, and Supplemental & Group Benefits reporting segments, as well as the Corporate & Other reporting segment. These segments are defined based on financial information management uses to evaluate performance and to determine the allocation of resources. The following sections provide analysis and discussion of the results of operations for each of the reporting segments as well as investment results.

Property & Casualty

The Property & Casualty segment primarily markets private passenger auto insurance and residential home insurance. Horace Mann offers standard auto coverages, including liability, collision and comprehensive. Property coverage includes both homeowners and renters policies. For both auto and property coverage, Horace Mann offers educators a discounted rate and the Educator Advantage® package of features. The Property & Casualty segment represented 46% of total revenues in 2023.

(All comparisons vs. same periods in 2023, unless noted otherwise)

For the three and nine months ended September 30, 2024, net income reflected the following factors:

Three months ended:

•Increases in average written premium per policy

•Significantly lower underlying loss ratio*

•Favorable prior years' reserve development in auto and property

•Lower net investment income driven by limited partnership portfolio

Nine months ended:

•Increases in average written premium per policy

•Significantly lower underlying loss ratio*

•Favorable prior years' reserve development in auto and property

•Catastrophe losses lower than prior year

•Higher net investment income driven by fixed income portfolios


Horace Mann Educators Corporation			41			Third Quarter 2024 Form 10-Q

The following table provides certain financial information for Property & Casualty for the periods indicated.


($ in millions, unless otherwise indicated)	Three Months Ended September 30,						2024-2023		Nine Months Ended September 30,						2024-2023
	2024			2023			% Change		2024			2023			% Change
Underwriting Results
Net premiums written*	$	212.3		$	188.4		12.7	%	$	583.6		$	508.4		14.8	%
Net premiums earned	187.3			164.3			14.0	%	539.7			474.1			13.8	%
Losses and loss adjustment expenses
Current accident year before catastrophe losses	113.7			120.5			-5.6	%	340.3			337.4			0.9	%
Current accident year catastrophe losses	34.0			28.7			18.5	%	91.1			92.6			-1.6	%
Prior years' reserve development(1)	(13.0)			—			N.M.		(19.2)			—			N.M.
Total losses and loss adjustment expenses	134.7			149.2			-9.7	%	412.2			430.0			-4.1	%
Operating expenses, including DAC amortization expense	48.8			42.5			14.8	%	144.2			128.5			12.2	%
Underwriting gain (loss)	3.8			(27.4)			113.9	%	(16.7)			(84.4)			80.2	%
Net investment income	8.8			12.0			-26.7	%	30.6			26.6			15.0	%
Other income	0.6			0.8			-25.0	%	1.9			2.3			-17.4	%
Income (loss) before income taxes	13.2			(14.6)			190.4	%	15.8			(55.5)			128.5	%
Income tax expense (benefit)	2.6			(3.3)			178.8	%	3.2			(11.2)			128.6	%
Net income (loss)	10.6			(11.3)			193.8	%	12.6			(44.3)			128.4	%
Core earnings (loss)*	10.6			(11.3)			193.8	%	12.6			(44.3)			128.4	%

Operating Statistics:
Auto
Net premiums written*	$	129.1		$	118.3		9.1	%	$	368.1		$	326.2		12.8	%
Loss and loss adjustment expense ratio	66.4		%	82.6		%	-16.2	pts	70.1		%	84.0		%	-13.9	pts
Expense ratio	26.4		%	26.1		%	0.3	pts	26.7		%	27.4		%	-0.7	pts
Combined ratio:	92.8		%	108.7		%	-15.9	pts	96.8		%	111.4		%	-14.6	pts
Prior years' reserve development(1)	-6.7		%	—		%	-6.7	pts	-4.4		%	—		%	-4.4	pts
Catastrophe losses	1.6		%	2.9		%	-1.3	pts	2.0		%	3.4		%	-1.4	pts
Underlying combined ratio*	97.9		%	105.8		%	-7.9	pts	99.2		%	108.0		%	-8.8	pts
Property (excludes other liability)
Net premiums written*	$	83.2		$	70.1		18.7	%	$	215.6		$	182.2		18.3	%
Loss and loss adjustment expense ratio	81.6		%	105.5		%	-23.9	pts	86.9		%	102.7		%	-15.8	pts
Expense ratio	25.5		%	25.5		%	—	pts	26.8		%	26.7		%	0.1	pts
Combined ratio:	107.1		%	131.0		%	-23.9	pts	113.7		%	129.4		%	-15.7	pts
Prior years' reserve development(1)	-7.4		%	—		%	-7.4	pts	-2.6		%	—		%	-2.6	pts
Catastrophe losses	47.6		%	43.7		%	3.9	pts	43.9		%	48.6		%	-4.7	pts
Underlying combined ratio*	66.9		%	87.3		%	-20.4	pts	72.4		%	80.8		%	-8.4	pts

Household retention-LTM
Auto									86.6		%	86.4		%	0.2	pts
Property									90.1		%	90.0		%	0.1	pts

(1) (Favorable) unfavorable.


Horace Mann Educators Corporation			42			Third Quarter 2024 Form 10-Q

The Property & Casualty segment three month net income of $10.6 million and nine month net income of $12.6 million, as well as the three month and nine month combined ratios of 97.9% and 103.1%, respectively, reflected the positive effect of rate and non-rate actions as well as positive prior years' reserve development. Net investment income for the three months of 2024 was $3.2 million lower driven by limited partnership portfolio returns while the nine month comparison was $4.0 million higher driven by the fixed income portfolio.

The current quarter reflects an increase in net premiums written of 12.7%, with average written premiums rising for both property and auto. Sales* were strong for the quarter, up 27.8% from the prior year, and household retention remains stable.

The three and nine month loss ratios decreased 18.9 points and 14.3 points, respectively, from last year. In addition, $13.0 million and $19.2 million of net favorable prior years' reserve development for the three and nine months of 2024 reduced the loss ratio 6.9 and 3.6 points, respectively. Catastrophe losses for the quarter were $34.0 million, pretax, contributing 18.1 points to the combined ratio. In total, there were 20 events designated as catastrophes by Property Claims Services (PCS) in this year’s third quarter. In the third quarter of 2023, catastrophe losses were $28.7 million, pretax, contributing 17.5 points to the combined ratio, from 25 PCS events.

The year-over-year increase in average written premiums for auto policies remained elevated in the third quarter at 16.4%, with retention declining slightly despite substantial rate increases. The third-quarter auto underlying loss ratio was 71.5%, improving 8.2 points from the prior year quarter, reflecting the benefit of rate and non-rate actions. The third quarter reported loss ratio benefited 6.7 points from favorable prior years' reserve development.

The year-over-year increase in average written premiums for property policies was 18.2% in the third quarter, as rate increases and inflation adjustments to coverage values continue to take effect and retention remains strong. The third-quarter property underlying loss ratio was 41.4%, a 20.4 point decrease from prior year reflecting the increase in average written premium and the elevated non-catastrophe weather losses in the prior year.

We continue to evaluate and implement actions to further mitigate our exposure and respond to rising weather trends. We are addressing the increased loss costs associated with the increased frequency of weather events in three ways: additional filed rate, product changes and enhanced modeling tools.


Horace Mann Educators Corporation			43			Third Quarter 2024 Form 10-Q

Life & Retirement

The Life & Retirement segment markets 403(b) tax-qualified fixed, fixed indexed and variable annuities; the Horace Mann Retirement Advantage® open architecture platform for 403(b)(7) and other defined contribution plans; and other retirement products to educators as well as traditional term and whole life insurance products. Horace Mann is one of the largest participants in the K-12 educator portion of the 403(b) tax-qualified annuity market, measured by 403(b) net premiums written on a statutory accounting basis. The Life & Retirement segment represented 36% of total revenues in 2023.

(All comparisons vs. same periods in 2023, unless noted otherwise)

For the three and nine months ended September 30, 2024, net income reflected the following factors:

•Annualized quarterly and nine month net interest spread on fixed annuities down 46 basis points and 59 basis points, respectively, due to higher interest credited rate on our retained block and lower returns on commercial mortgage loan funds during the first six months of 2024

•Benefits expense in Retirement benefited from a favorable market risk benefit adjustment in the prior year quarter

•Life mortality costs higher than prior year

•Net spread from FHLB funding agreements remained stable year over year as net investment income reflected higher earnings from the floating rate investments backing the program and interest credited reflected offsetting higher interest expense


Horace Mann Educators Corporation			44			Third Quarter 2024 Form 10-Q

The following table provides certain information for Life & Retirement for the periods indicated.


($ in millions)	Three Months Ended September 30,				2024-2023		Nine Months Ended September 30,						2024-2023
	2024		2023		% Change		2024			2023			% Change
Life & Retirement
Net premiums written and contract deposits*	$	155.8	$	154.8	0.6	%	$	421.0		$	432.8		-2.7	%
Revenues
Net premiums and contract charges earned	39.1		38.2		2.4	%	114.9			113.3			1.4	%
Net investment income	94.6		96.9		-2.4	%	269.3			274.1			-1.8	%
Other income	5.3		3.7		43.2	%	14.7			12.1			21.5	%
Total revenues	139.0		138.8		0.1	%	398.9			399.5			-0.2	%
Benefits and Expenses
Benefits and change in reserves	35.2		30.5		15.4	%	96.1			91.0			5.6	%
Interest credited	53.6		51.7		3.7	%	158.0			149.4			5.8	%
Operating expenses	26.1		23.7		10.1	%	78.6			72.7			8.1	%
DAC amortization expense	5.9		7.5		-21.3	%	18.6			21.9			-15.1	%
Intangible asset amortization expense	0.1		0.1		N.M.		0.2			0.2			—	%
Total benefits and expenses	120.9		113.5		6.5	%	351.5			335.2			4.9	%
Income before income taxes	18.1		25.3		-28.5	%	47.4			64.3			-26.3	%
Income tax expense	3.3		4.4		-25.0	%	8.6			12.0			-28.3	%
Net income	14.8		20.9		-29.2	%	38.8			52.3			-25.8	%
Core earnings*	14.8		20.9		-29.2	%	38.8			52.3			-25.8	%
Adjusted core earnings*	15.1		20.0		-24.5	%	37.3			49.0			-23.9	%

Life policies in force (in thousands)							161			162			-0.6	%
Life insurance in force							$	20,903		$	20,351		2.7	%
Life persistency - LTM							96.0		%	95.9		%	0.1	pts

Annuity contracts in force (in thousands)							218			223			-2.2	%
Horace Mann Retirement Advantage® contracts in force (in thousands)							21			19			10.5	%
Cash value persistency - LTM							91.5		%	91.7		%	-0.2	pts

Life & Retirement segment net income for the three and nine months ended September 30, 2024, of $14.8 million and $38.8 million was down 29.2% and 25.8%, respectively, primarily due to a lower net interest spread and unfavorable benefits. The spread was affected by higher interest credited and lower returns related to commercial mortgage loan funds during the first six months of 2024. Benefits and change in reserves reflected a lower favorable market risk benefit adjustment compared to the prior year and higher mortality. While the net spread from our FHLB funding agreements remained stable compared with 2023, higher FHLB borrowing costs and increased advances drove the higher interest credited expense along with a higher interest credited rate on our retained block.

For the Retirement business, net annuity contract deposits were up 1.0% for the quarter at $126.8 million, while deposits to the retained 403(b) block remained stable. Educators continue to begin their relationship with Horace Mann through 403(b) retirement savings products, which provide encouraging cross-sell opportunities. Average persistency has declined slightly from the prior year.

Horace Mann currently has $5.5 billion in annuity assets under management, including $2.1 billion of fixed annuities, $3.0 billion of variable annuities and $0.4 billion of fixed indexed annuities. Assets under administration, which includes Horace Mann Retirement Advantage® and other advisory and recordkeeping assets, continue to benefit from the strong equity markets.

Life annualized sales* were $2.5 million, up 13.6% for the quarter and persistency remains strong. Life insurance in force rose to $20.9 billion at quarter-end.

We actively manage our interest rate risk exposure, considering a variety of factors, including earned interest rates, credited interest rates and the relationship between the expected durations of assets and liabilities. We


Horace Mann Educators Corporation			45			Third Quarter 2024 Form 10-Q

estimate that over the next 12 months approximately $520.2 million of the Life & Retirement investment portfolio and related investable cash flows will be reinvested at current market rates.

As a general guideline, based on our existing policies and investment portfolio, the impact from a 100 basis point decline in the average reinvestment rate would reduce Life & Retirement net investment income by approximately $2.0 million in year one and $6.0 million in year two, reducing the annualized net interest spread on fixed annuities by approximately 7 basis points and 21 basis points in the respective periods, compared to the current period annualized net interest spread on fixed annuities. We could also consider potential changes in rates credited to policyholders, tempered by any restrictions on the ability to adjust policyholder rates due to guaranteed minimum crediting rates.

Supplemental & Group Benefits

The Supplemental & Group Benefits segment markets employer-sponsored group solutions for districts and other public employers, as well as worksite direct products typically distributed through the employer channel. The Worksite business provides group term life, disability and specialty health insurance, along with supplemental products including cancer, heart, hospital, supplemental disability and accident coverages. The Supplemental & Group Benefits segment represented 19% of total revenues in 2023.

(All comparisons vs. same periods in 2023, unless noted otherwise)

For the three and nine months ended September 30, 2024, net income reflected the following factors:

•Decline in premium due to run-off of an indemnified block of employer-sponsored products; net premiums earned increased 2.2% excluding the run-off for the nine months

•Higher benefits ratio for worksite direct products for the nine months reflecting the anticipated increase in utilization

•Higher benefits ratio for employer sponsored for three months driven by book of business in run-off but comparable benefit ratios for the nine months


Horace Mann Educators Corporation			46			Third Quarter 2024 Form 10-Q

The following table provides certain information for Supplemental & Group Benefits for the periods indicated.


($ in millions)	Three Months Ended September 30,						2024-2023		Nine Months Ended September 30,						2024-2023
	2024			2023			% Change		2024			2023			% Change
Supplemental & Group Benefits
Revenues
Net premiums and contract charges earned	$	62.7		$	63.5		-1.3	%	$	190.6		$	195.2		-2.4	%
Net investment income	10.1			10.3			-1.9	%	28.4			28.5			-0.4	%
Other income	(0.4)			(3.1)			87.1	%	(4.6)			(8.2)			43.9	%
Total revenues	72.4			70.7			2.4	%	214.4			215.5			-0.5	%
Benefits and Expenses
Benefits, settlement expenses and change in reserves	22.6			20.5			10.2	%	70.1			69.3			1.2	%
Operating expenses (including DAC amortization expense)	27.5			26.4			4.2	%	82.8			82.3			0.6	%
Intangible asset amortization expense	3.5			3.6			-2.8	%	10.7			10.9			-1.8	%
Total benefits and expenses	53.6			50.5			6.1	%	163.6			162.5			0.7	%
Income before income taxes	18.8			20.2			-6.9	%	50.8			53.0			-4.2	%
Income tax expense	4.0			4.4			-9.1	%	10.9			11.4			-4.4	%
Net income	14.8			15.8			-6.3	%	39.9			41.6			-4.1	%
Core earnings*	14.8			15.8			-6.3	%	39.9			41.6			-4.1	%
Adjusted core earnings*	17.6			18.7			-5.9	%	48.4			50.2			-3.6	%

Benefits ratio	36.0		%	32.3		%	3.7	pts	36.8		%	35.5		%	1.3	pts
Operating expense ratio	37.9		%	37.3		%	0.6	pts	38.6		%	38.2		%	0.4	pts
Pretax profit margin	26.0		%	28.5		%	-2.5	pts	23.7		%	24.6		%	-0.9	pts

Worksite direct products benefits ratio	27.8		%	27.8		%	—	pts	28.9		%	26.7		%	2.2	pts
Worksite direct premium persistency (rolling beginning 12 months)	91.5		%	90.5		%	1.0	pts	91.5		%	90.5		%	1.0	pts
Employer-sponsored products benefits ratio	43.6		%	36.4		%	7.2	pts	43.9		%	43.1		%	0.8	pts
Employer-sponsored covered lives (in thousands)									842			825			2.1	%

Supplemental & Group Benefits segment net income for the three and nine months ended September 30, 2024, of $14.8 million and $39.9 million were down $1.0 million and $1.7 million, respectively. The worksite direct benefits ratio increased for the nine months reflecting the anticipated increase in utilization. The employer-sponsored benefit ratio was 0.8 points higher than the prior year due to the block of business in run-off and is offset in Other income due to the indemnification agreement related to the book in run-off. The non-cash impact of amortization of intangible assets under purchase accounting reduced core earnings by $3.6 million, pretax, in both years.

Total sales* for the nine months ended September 30, 2024 were $19.4 million with worksite direct product sales of $11.5 million and employer-sponsored products of $7.9 million. Worksite direct sales increased 7.5% and employer sponsored sales decreased 21.0%. Employer sponsored sales may vary significantly between comparable periods due to differences in average case size and specific timing of new cases can result in quarter over quarter variances. Persistency remains strong for the segment.


Horace Mann Educators Corporation			47			Third Quarter 2024 Form 10-Q

Corporate & Other

(All comparisons vs. same periods in 2023, unless noted otherwise)

The following table provides certain financial information for Corporate & Other for the periods indicated.


($ in millions)	Three Months Ended September 30,				2024-2023		Nine Months Ended September 30,				2024-2023
	2024		2023		% Change		2024		2023		% Change
Revenues


Total revenues	0.2		0.5		-60.0	%	0.6		0.7		-14.3	%

Expenses
Interest expense	$	8.7	$	7.5	16.0	%	$	26.1	$	21.1	23.7	%
Other operating expenses	2.7		1.9		42.1	%	8.3		5.7		45.6	%
Total expenses	11.4		9.4		21.3	%	34.4		26.8		28.4	%
Loss before income taxes	(11.2)		(8.9)		-25.8	%	(33.8)		(26.0)		-30.0	%
Income tax benefit	(2.3)		(1.8)		-27.8	%	(7.0)		(5.3)		-32.1	%
Core loss* after tax	(8.9)		(7.1)		-25.4	%	(26.8)		(20.7)		-29.5	%
Net investment gains (losses), pretax	3.8		(8.4)		145.2	%	0.1		(29.7)		100.3	%
Tax on net investment gains (losses)	0.8		(1.8)		144.4	%	—		(6.3)		100.0	%
Net investment gains (losses), after tax	3.0		(6.6)		145.5	%	0.1		(23.4)		100.4	%
Net loss	(5.9)		(13.7)		56.9	%	(26.7)		(44.1)		39.5	%

For the three and nine months ended September 30, 2024, the net results improved $7.8 million and $17.4 million, respectively, primarily due to lower net investment losses partially offset by an increase in interest expense.

Investment Results

(All comparisons vs. same periods in 2023, unless noted otherwise)

Our investment strategy is primarily focused on generating income to support product liabilities, and balances principal protection and risk. Total net investment income includes net investment income from our managed investment portfolio as well as accreted investment income from the deposit asset on reinsurance related to the company's reinsurance of policy liabilities related to legacy individual annuities written in 2002 or earlier.


($ in millions)	Three Months Ended September 30,				2024-2023		Nine Months Ended September 30,				2024-2023
	2024		2023		% Change		2024		2023		% Change
Net investment income - managed investment portfolio	$	87.2	$	91.8	-5.0	%	$	249.8	$	249.0	0.3	%
Investment income - deposit asset on reinsurance	25.8		27.1		-4.8	%	77.0		78.8		-2.3	%
Total net investment income	113.0		118.9		-5.0	%	326.8		327.8		-0.3	%
Pretax net investment gains (losses)	3.8		(8.4)		145.2	%	0.1		(29.7)		100.3	%
Pretax net unrealized investment losses on fixed maturity securities							(301.8)		(680.0)		N.M

For the three and nine months ended September 30, 2024, net investment income from our managed investment portfolio decreased $4.6 million and increased $0.8 million, respectively. The decrease for the three months ended September 30, 2024 was primarily driven by lower returns in the limited partnership portfolio. The increase for the nine months ended September 30, 2024 reflected stronger income from the fixed income portfolios and the FHLB program, significantly offset by lower returns in the commercial mortgage loan fund portfolio. The nine month investment yield on the portfolio excluding limited partnership interests was 4.5%, with new money yields continuing to exceed portfolio yields in the core fixed maturity securities portfolio.


Horace Mann Educators Corporation			48			Third Quarter 2024 Form 10-Q

For the three and nine months ended September 30, 2024, pretax net investment losses decreased $12.2 million and $29.8 million, respectively. The decrease was due to a reduction in realized losses on dispositions of invested assets.

Pretax net unrealized investment losses on fixed maturity securities as of September 30, 2024 were down $115.8 million, or 27.7%, compared to December 31, 2023, primarily due to a decrease of 10 basis points in US Treasury rates and investment-grade credit spreads that were tighter by 10 basis points.

Fixed Maturity and Equity Securities Portfolios

The table below presents our fixed maturity and equity securities portfolios by major asset class, including the 10 largest sectors of our corporate bond holdings (based on fair value).


($ in millions)	September 30, 2024
	Number of Issuers	Fair Value		Amortized Cost, net		Pretax Net Unrealized Loss
Fixed maturity securities
Corporate bonds
Banking & Finance	158	$	445.8	$	490.6	$	(44.8)
Miscellaneous	39	226.8		233.4		(6.6)
Insurance	58	172.9		181.3		(8.4)
Energy	87	145.9		153.6		(7.7)
HealthCare, Pharmacy	76	122.7		139.7		(17.0)
Utilities	76	115.1		128.5		(13.4)
Real Estate	35	88.6		94.1		(5.5)
Transportation	42	72.6		78.3		(5.7)
Consumer Products	55	69.2		80.7		(11.5)
Natural Gas	15	59.0		63.7		(4.7)
All other corporates(1)	298	425.9		461.0		(35.1)
Total corporate bonds	939	1,944.5		2,104.9		(160.4)
Mortgage-backed securities
U.S. Government and federally sponsored agencies	240	484.3		514.7		(30.4)
Commercial(2)	161	332.5		348.4		(15.9)
Other	74	54.7		54.8		(0.1)
Municipal bonds(3)	583	1,215.7		1,258.7		(43.0)
Government bonds
U.S.	48	385.7		436.1		(50.4)
Foreign	3	16.4		17.1		(0.7)
Collateralized loan obligations(4)	312	810.1		809.3		0.8
Asset-backed securities	156	329.3		331.0		(1.7)
Total fixed maturity securities	2,516	$	5,573.2	$	5,875.0	$	(301.8)

Equity securities
Non-redeemable preferred stocks	19	$	69.2
Common stocks	4	1.7
Closed-end fund	1	18.0
Total equity securities	24	$	88.9

Total	2,540	$	5,662.1

(1)The All other corporates category contains 19 additional industry sectors. Food and beverage, technology, broadcasting and media, telecommunications, and retail represented $220.1 million of fair value at September 30, 2024, with the remaining 14 sectors each representing less than $36.0 million.

(2)At September 30, 2024, 100% were investment grade, with an overall credit rating of AA+, and the positions were well diversified by property type, geography and sponsor.

(3)Holdings are geographically diversified, 40.3% are tax-exempt and 77.2% are revenue bonds tied to essential services, such as mass transit, water and sewer. The overall credit quality of the municipal bond portfolio was AA- at September 30, 2024.

(4) Based on fair value, 95.7% of the collateralized loan obligation securities were rated investment grade based on ratings assigned by a nationally recognized statistical ratings organization (NRSO- S&P, Moody's, Fitch, Dominion, A.M. Best, Morningstar, Egan Jones and Kroll).


Horace Mann Educators Corporation			49			Third Quarter 2024 Form 10-Q

As of September 30, 2024, our diversified fixed maturity securities portfolio consisted of 3,860 investment positions, issued by 2,516 entities, and totaled approximately $5.6 billion in fair value. This portfolio was 93.9% investment grade, based on fair value, with an average quality rating of A+. Our investment guidelines target single corporate issuer concentrations to 0.5% of invested assets for AAA or AA rated securities, 0.35% of invested assets for A or BBB rated securities, and $5.0 million for non-investment grade securities.

Rating of Fixed Maturity Securities and Equity Securities(1)

The following table presents the composition and fair value of our fixed maturity and equity securities portfolios by rating category. As of September 30, 2024, 93.4% of these combined portfolios were investment grade, based on fair value, with an overall average quality rating of A+. We have classified the entire fixed maturity securities portfolio as available for sale, which is carried at fair value.


($ in millions)	Percent of Portfolio Fair Value				September 30, 2024
	December 31, 2023		September 30, 2024		Fair Value		Amortized Cost, net
Fixed maturity securities
AAA	11.2	%	11.1	%	$	620.4	$	634.7
AA(2)	42.1		41.5		2,314.5		2,476.9
A	17.7		19.8		1,101.0		1,128.1
BBB	21.6		21.5		1,198.9		1,270.2
BB	1.2		1.4		78.4		81.6
B	0.7		0.6		32.7		33.7
CCC or lower	0.1		0.1		3.2		4.1
Not rated(3)	5.4		4.0		224.1		245.7
Total fixed maturity securities	100.0	%	100.0	%	$	5,573.2	$	5,875.0
Equity securities
AAA	—	%	—	%	$	—
AA	—		—		—
A	—		—		—
BBB	63.2		62.2		55.3
BB	12.4		12.9		11.5
B	—		0.1		0.1
CCC or lower	—		—		—
Not rated	24.4		24.8		22.0
Total equity securities	100.0	%	100.0	%	$	88.9

Total					$	5,662.1

(1)Ratings are assigned by an NRSRO when available, If no rating is available from an NRSRO, then an internally developed rating is used. Ratings for publicly traded securities are determined when the securities are acquired and are updated monthly to reflect any changes in ratings.

(2)At September 30, 2024, the AA rated fair value amount included $385.69 million of U.S. Government and federally sponsored agency securities and $719.6 million of mortgage-backed and other asset-backed securities issued by U.S. Government and federally sponsored agencies.

(3)This category primarily represents private placement and municipal securities not rated by a NRSRO.

As of September 30, 2024, the fixed maturity securities portfolio had $388.8 million of pretax gross unrealized investment losses on $3,286.4 million of fair value related to 2,116 positions. Of the investment positions with gross unrealized losses, there were 320 trading below 80.0% of the carrying value as of September 30, 2024. The Company views the decrease in fair value of all of the fixed maturity securities with unrealized losses as of September 30, 2024 as due to factors other than a credit loss. Future changes in circumstances related to these and other securities could require subsequent recognition of impairment. See Part II - Item 8, Note 2 of the Consolidated Financial Statements in this Quarterly Report on Form 10-Q for more information.

Unrealized investment losses declined due to a decrease in US Treasury rates and tighter credit spreads. As of September 30, 2024, the 10-year U.S. Treasury yield decreased 10 basis points since December 31, 2023, declining from 3.88% as of December 31, 2023 to 3.78% as of September 30, 2024. Credit spreads were tighter during the same time period, with investment grade and high yield tighter by 10 and 28 basis points, respectively. As of September 30, 2024, investment grade and high yield total returns were up 5.3% and 8.0%, respectively, since December 31, 2023.


Horace Mann Educators Corporation			50			Third Quarter 2024 Form 10-Q

Liquidity and Capital Resources

Our liquidity and access to capital were not materially impacted by inflation or changes in interest rates during the three and nine months ended September 30, 2024. For further discussion regarding the potential future impacts of inflation and changes in interest rates, see Part I – Item 1A - Risk Factors and Part II – Item 7 – Management’s Discussion and Analysis of Financial Condition and Results of Operations - Effects of Inflation and Changes in Interest Rates presented in our Annual Report on Form 10-K for the year ended December 31, 2023.

Investments

Information regarding our investment portfolio, which is comprised primarily of investment grade fixed maturity securities, is presented in Part I - Item 1, Note 2 of the Consolidated Financial Statements as well as Part I - Item 2 - Investment Results in this Quarterly Report on Form 10-Q.

Cash Flow

Our short-term liquidity requirements, within a 12 month operating cycle, are for the timely payment of claims and benefits to policyholders, operating expenses, interest payments and federal income taxes. Cash flow generated from operations has been, and is expected to be, adequate to meet our operating cash needs in the next 12 months. Cash flow in excess of operational needs has been used to fund business growth, pay dividends to shareholders and repurchase shares of our common stock. Long-term liquidity requirements, beyond one year, are principally for the payment of future insurance and annuity policy claims and benefits, as well as retirement of debt. The following table summarizes our consolidated cash flows activity for the periods indicated.


($ in millions)	Nine Months Ended September 30,				2024-2023
	2024		2023		% Change
Net cash provided by operating activities	$	258.6	$	199.2	29.8	%
Net cash used in investing activities	(131.4)		(85.6)		53.5	%
Net cash used in financing activities	(117.1)		(121.9)		-3.9	%
Net decrease in cash	10.1		(8.3)		-221.7	%
Cash at beginning of period	29.7		42.8		-30.6	%
Cash at end of period	$	39.8	$	34.5	15.4	%

Operating Activities

As a holding company, we conduct our principal operations in the personal lines segment of the property and casualty, life, retirement, supplemental and group insurance industries through our subsidiaries. Our insurance subsidiaries generate cash flow from premium and investment income, generally well in excess of their immediate needs for policy obligations, operating expenses and other cash requirements. Fluctuations in net cash provided by operating activities primarily reflect seasonality in timing of premium and investment income collections and claims and benefits payments.

For the nine months ended September 30, 2024, net cash provided by operating activities increased $59.4 million.

Investing Activities

Net cash used in investing activities for the nine months ended September 30, 2024 and 2023 was $(131.4) million and $(85.6) million, respectively.

Investing cash inflows consist primarily of proceeds from the sales and maturities of investments. Investing cash outflows consist primarily of payments for purchases of investments. Our investment strategy is to appropriately match the cash flows and durations of our assets with the cash flows and durations of our liabilities to meet the funding requirements of our business and, generally, the expected principal and interest payments produced by our fixed maturity securities portfolio adequately fund the estimated runoff of our insurance reserves. When market opportunities arise, we may sell selected securities and reinvest the proceeds to improve the yield and credit quality of our portfolio. We may at times also sell selected securities and reinvest the proceeds to improve


Horace Mann Educators Corporation			51			Third Quarter 2024 Form 10-Q

the duration matching of our assets and liabilities and/or rebalance our portfolio. As a result, sales before maturity may vary from period to period. The sale and purchase of short-term investments is influenced by proceeds received from FHLB funding advances, issuance of debt, our reverse repurchase agreement program, and by the amount of cash which is at times held in short-term investments to facilitate the availability of cash to fund the purchase of appropriate long-term investments, repay maturing debt, and/or to respond to catastrophes.

Financing Activities

Financing activities include primarily payment of dividends, receipt and withdrawal of funds by annuity contractholders, changes in the deposit asset on reinsurance, repurchases of our common stock, fluctuations in book overdraft balances, and borrowings, repayments and repurchases related to debt facilities.

For the nine months ended September 30, 2024, net cash used in financing activities increased $4.8 million compared to the prior year period, primarily due to a $42.9 million decrease in cash outflows from the deposit asset on reinsurance and a $115.0 million increase in net cash inflow from reverse repurchase agreements partially offset by a $57.0 million net reduction in net cash inflows (advances less repayments) from FHLB funding agreements and a $48.7 million net reduction in cash inflows related to issuing Senior Notes of $297.7 million and repaying outstanding borrowing under our Revolving Credit Facility of $249.0 million in 2023.

The following table shows activity from FHLB funding agreements for the periods indicated.


($ in millions)	Nine Months Ended September 30,				2024-2023		2024-2023
	2024		2023		$ Change		% Change
Balance at beginning of the period	$	904.5	$	792.5	$	112.0	14.1	%
Advances received from FHLB funding agreements	225.0		201.5		23.5		11.7	%
Principal repayments on FHLB funding agreements	(170.0)		(89.5)		(80.5)		89.9	%
Balance at end of the period	$	959.5	$	904.5	$	55.0	6.1	%


Horace Mann Educators Corporation			52			Third Quarter 2024 Form 10-Q

Liquidity Sources and Uses

Our potential sources and uses of funds principally include the following activities:

Property & Casualty

Life & Retirement

Supplemental & Group Benefits

Corporate & Other

Activities for potential sources of funds

Receipt of insurance premiums, contractholder charges and fees

☑

Recurring service fees, commissions and overrides

☑

Contractholder fund deposits

☑

Reinsurance and indemnification program recoveries

☑

Receipts of principal, interest and dividends on investments

☑

Proceeds from sales of investments

☑

Proceeds from FHLB borrowing and funding agreements

☑

Proceeds from reverse repurchase agreements

☑

Intercompany loans

☑

Capital contributions from parent

☑

Dividends or return of capital from subsidiaries

☑

Tax refunds/settlements

☑

Proceeds from periodic issuance of additional securities

☑

Proceeds from debt issuances

☑

Proceeds from revolving credit facility

☑

Receipt of intercompany settlements related to employee benefit plans

☑

Activities for potential uses of funds

Payment of claims and related expenses

☑

Payment of contract benefits, surrenders and withdrawals

☑

Reinsurance cessions and indemnification program payments

☑

Payment of operating costs and expenses

☑

Payments to purchase investments

☑

Repayment of FHLB borrowing and funding agreements

☑

Repayment of reverse repurchase agreements

☑

Payment or repayment of intercompany loans

☑

Capital contributions to subsidiaries

☑

Dividends or return of capital to shareholders/parent company

☑

Tax payments/settlements

☑

Common share repurchases

☑

Debt service expenses and repayments

☑

Repayment on revolving credit facility

☑

Payments related to employee benefit plans

☑

Payments for business acquisitions

☑

We actively manage our financial position and liquidity levels in light of changing market, economic and business conditions. Liquidity is managed at both the entity and enterprise level across HMEC and is assessed on both base and stressed level liquidity needs. We believe we have sufficient liquidity to meet these needs. Additionally, we have existing intercompany agreements in place that facilitate liquidity management across HMEC to enhance flexibility.


Horace Mann Educators Corporation			53			Third Quarter 2024 Form 10-Q

As of September 30, 2024, we held $1.1 billion of cash, U.S. government and agency fixed maturity securities and public equity securities (excluding non-redeemable preferred stocks and foreign equity securities) which, under normal market conditions, could be rapidly liquidated.

Certain remote events and circumstances could constrain our liquidity. Those events and circumstances include, for example, a catastrophe resulting in extraordinary losses, a downgrade of our Senior Notes rating to non-investment grade status or a downgrade in our insurance subsidiaries' financial strength ratings. The rating agencies also consider the interdependence of our individually rated entities; therefore, a rating change in one entity could potentially affect the ratings of other related entities.

Capital Resources

We have determined the amount of capital that is needed to adequately fund and support business growth, primarily based on risk-based capital formulas, including those developed by the National Association of Insurance Commissioners. Historically, our insurance subsidiaries have generated capital in excess of such needed levels. These excess amounts have been paid to us through dividends. We have then utilized these dividends and our access to the capital markets to fund growth initiatives, service and retire debt, pay dividends to our shareholders, repurchase shares of our common stock and for other corporate purposes. If necessary, we also have other potential sources of liquidity that could provide for additional funding to meet corporate obligations or pay shareholder dividends, including a revolving line of credit, reverse repurchase agreements program, as well as issuances of various securities.

The insurance subsidiaries are subject to various regulatory restrictions that limit the amount of annual dividends or other distributions, including loans or cash advances, available to us without prior approval of the insurance regulatory authorities. The aggregate amount of dividends that may be paid in 2024 from all of our insurance subsidiaries without prior regulatory approval is $112.3 million, excluding the impact and timing of prior dividends, of which $73.0 million was paid during the nine months ended September 30, 2024. We anticipate that our sources of capital will continue to generate sufficient capital to meet the needs for business growth, debt interest payments, shareholder dividends and our share repurchase programs. Additional information is contained in Part II - Item 8, Note 13 of the Consolidated Financial Statements in our Annual Report on Form 10-K for the year ended December 31, 2023.

Total capital was $1,833.7 million as of September 30, 2024, including $546.7 million of long-term debt. Total debt represented 29.8% of total capital including net unrealized investment losses on fixed maturity securities (26.7% excluding net unrealized investment losses on fixed maturity securities and net reserve remeasurements attributable to discount rates*) as of September 30, 2024, which was slightly above our long-term target of 25.0% for our debt to capital ratio excluding net unrealized investment gains (losses) and net reserve remeasurements attributable to discount rate.

Shareholders' equity was $1,287.0 million as of September 30, 2024, including net unrealized investment losses on fixed maturity securities of $237.2 million after taxes. The market value of our common stock and the market value per share were $1,423.4 million and $34.95, respectively, as of September 30, 2024. Book value per share and adjusted book value per share* was $31.60 and $36.89, respectively, as of September 30, 2024.

Additional information regarding net unrealized investment gains (losses) on fixed maturity securities as of September 30, 2024 is included in Part I - Item 1, Note 2 of the Consolidated Financial Statements as well as in Part I - Item 2 - Investment Results in this Quarterly Report on Form 10-Q.

Total dividends paid to shareholders was $41.7 million for the nine months ended September 30, 2024. In March, May and September of 2024, the Board of Directors (Board) approved regular quarterly dividends of $0.34 per share.

For the nine months ended September 30, 2024, we repurchased 256,159 shares of our common stock at an average price per share of $33.33 under our share repurchase program. See Part II - Item 8, Note 12 of the Consolidated Financial Statements in our Annual Report on Form 10-K for the year ended December 31, 2023 for more information. As of September 30, 2024, $26.3 million remained authorized for future share repurchases under the share repurchase program.


Horace Mann Educators Corporation			54			Third Quarter 2024 Form 10-Q

The following table summarizes our debt obligations.


($ in millions)	Interest Rates	Final Maturity	September 30, 2024		December 31, 2023

Short-term debt
Revolving Credit Facility	Variable	2026	$	—	$	—
Long-term debt(1)
7.25% 2023 Senior Notes, Aggregate principal amount of $300.0 less unaccrued discount of $0.4 and $0.5 and unamortized debt issuance costs of $2.5 and $2.8	7.25%	2028	297.1		296.7
4.50% 2015 Senior Notes, Aggregate principal amount of $250.0 less unaccrued discount of $0.1 and $0.2 and unamortized debt issuance costs of $0.3 and $0.5	4.50%	2025	249.6		249.3
Total			$	546.7	$	546.0

(1) We designate debt obligations as "long-term" based on maturity date at issuance.

On September 15, 2023, we issued $300.0 million aggregate principal amount of 7.25% senior notes (2023 Senior Notes), which will mature on September 15, 2028, issued at a discount resulting in an effective yield of 7.29%. Interest on the 2023 Senior Notes is payable semi-annually at a rate of 7.25%. The 2023 Senior Notes are redeemable in whole or in part, at any time, at our option, at a redemption price equal to the greater of (1) 100% of the principal amount of the notes being redeemed or (2) the sum of the present values of the remaining scheduled payments of principal and interest thereon discounted, on a semi-annual basis, at the Treasury yield (as defined in the indenture) plus 45 basis points, plus, in either of the above cases, accrued interest to the date of redemption. The 2023 Senior Notes are traded in the open market (HMN 7.25).

The net proceeds from the sale of the 2023 Senior Notes were used to fully repay the $249.0 million balance on the Revolving Credit Facility with remaining net proceeds from the sale to be used for general corporate purposes. As of September 30, 2024, we had $325.0 million available on the Revolving Credit Facility, with an interest rate based on SOFR plus 115 basis points plus the applicable benchmark adjustment spread. The Revolving Credit Facility expires on July 12, 2026. The unused portion of the Revolving Credit Facility is subject to a variable commitment fee, which was 0.15% on an annual basis as of September 30, 2024.

As of September 30, 2024, we had outstanding $250.0 million aggregate principal amount of 4.50% senior notes (2015 Senior Notes), which will mature on December 1, 2025, issued at a discount resulting in an effective yield of 4.53%. Interest on the 2015 Senior Notes is payable semi-annually at a rate of 4.50%. Detailed information regarding the redemption terms of the 2015 Senior Notes is contained in the Part II - Item 8, Note 10 of the Consolidated Financial Statements in our Annual Report on Form 10-K for the year ended December 31, 2023. The 2015 Senior Notes are traded in the open market (HMN 4.50).

As of September 30, 2024, we had no borrowings outstanding with FHLB. The Board has authorized a maximum amount equal to 15% of net aggregate admitted assets less separate account assets of the insurance subsidiaries for FHLB borrowing and funding agreements which is below our maximum FHLB borrowing capacity.

We had an obligation for securities sold under reverse repurchase agreements of $45.0 million at September 30, 2024 compared to no reverse repurchase agreements outstanding at December 31, 2023.

To provide additional capital management flexibility, we filed a "universal shelf" registration statement on Form S-3 with the Securities and Exchange Commission (SEC) on March 8, 2024. The registration statement, which registered the offer and sale from time to time of an indeterminate amount of various securities, which may include debt securities, common stock, preferred stock, depositary shares, warrants, delayed delivery contracts and/or units that include any of these securities, was automatically effective on March 8, 2024. Unless withdrawn by us earlier, this registration statement will remain effective through March 8, 2027. No securities associated with the registration statement have been issued at the time of issuance of this Quarterly Report on Form 10-Q.

On March 13, 2018, we filed a "shelf" registration statement on Form S-4 with the SEC which became effective on May 2, 2018. Under this registration statement, we may from time to time offer and issue up to 5,000,000 shares of our common stock in connection with future acquisitions of other businesses, assets or securities.


Horace Mann Educators Corporation			55			Third Quarter 2024 Form 10-Q

Unless withdrawn by us, this registration statement will remain effective indefinitely. No securities associated with the registration statement have been issued at the time of issuance of this Quarterly Report on Form 10-Q.

Financial Ratings

Our principal insurance subsidiaries are rated by A.M. Best Company, Inc. (A.M. Best), Fitch, Moody's, and S&P. These rating agencies have also assigned ratings to our Senior Notes. The ratings that are assigned by these agencies, which are subject to change, can impact, among other things, our access to sources of capital, cost of capital, and competitive position. These ratings are not a recommendation to buy or hold any of our securities.

All four agencies currently have assigned the same insurance financial strength ratings to our Property & Casualty and Life insurance subsidiaries. Only A.M. Best currently rates our Supplemental & Group Benefits subsidiaries, each of which is rated at the same level as our Property & Casualty and Life & Retirement subsidiaries. Assigned ratings and respective affirmation/review dates as of October 31, 2024 were as follows:

Insurance Financial

Affirmed/

Strength Ratings (Outlook)

Debt Ratings (Outlook)

Reviewed

A.M. Best

HMEC (parent company)

N.A.

bbb

(stable)

8/22/2024

HMEC's Life & Retirement subsidiaries

(stable)

N.A.

8/22/2024

HMEC's Property & Casualty subsidiaries

(stable)

N.A.

8/22/2024

HMEC's Supplemental & Group Benefits

subsidiaries

Madison National Life Insurance Company

(stable)

N.A.

8/22/2024

National Teachers Associates Life

Insurance Company

(stable)

N.A.

8/22/2024

Fitch

HMEC (parent company)

BBB

(stable)

8/29/2024

HMEC's Life Group

(stable)

8/29/2024

HMEC's P&C Group

(stable)

8/29/2024

Moody's

HMEC (parent company)

Baa2

(negative)

4/1/2024

HMEC's Life Group

(negative)

7/24/2024

HMEC's P&C Group

(negative)

4/1/2024

S&P

(stable)

BBB

(stable)

1/30/2024

Reinsurance Programs

There have been no material changes in our reinsurance programs for our Property & Casualty, Life & Retirement and Supplemental & Group Benefits segments from that disclosed in Part I - Item 1, Reporting Segments in our Annual Report on Form 10-K for the year ended December 31, 2023.

ITEM 3. I Quantitative and Qualitative Disclosures about Market Risk

Market value risk, our primary market risk exposure, is the risk that our invested assets will decrease in value. This decrease in value may be due to (1) a change in the yields realized on our assets and prevailing market yields for similar assets, (2) an unfavorable change in the liquidity of an investment, (3) an unfavorable change in the financial prospects of the issuer of an investment, or (4) a downgrade in the credit rating of the issuer of an investment. Also see Consolidated Results of Operations in Part I - Item 2 of this Quarterly Report on Form 10-Q regarding net investment losses.

Significant changes in interest rates expose us to the risk of experiencing losses or earning a reduced level of income based on the difference between the interest rates earned on our investments and the credited interest rates on our insurance and investment contract liabilities. Also see Consolidated Results of Operations in Part I - Item 2 of this Quarterly Report on Form 10-Q regarding interest credited to policyholders.


Horace Mann Educators Corporation			56			Third Quarter 2024 Form 10-Q

We seek to manage our market value risk by coordinating the projected cash inflows of assets with the projected cash outflows of liabilities. For all of our assets and liabilities, we seek to maintain reasonable durations, consistent with the maximization of income without sacrificing investment quality, while providing for liquidity and diversification. The investment risk associated with variable annuity deposits and the underlying mutual funds is assumed by those contractholders, and not by us. Certain fees that we earn from variable annuity deposits are based on the market value of the funds deposited.

More detailed descriptions of our exposure to market value risks and the management of those risks is contained in Part II - Item 7A of our Annual Report on Form 10-K for the year ended December 31, 2023.

ITEM 4. I Controls and Procedures

Management's Conclusion Regarding the Effectiveness of Disclosure Controls and Procedures

Under the supervision and with the participation of our management, including our chief executive officer and chief financial officer, we conducted an evaluation of the effectiveness of the design and operation of our disclosure controls and procedures, as such term is defined in Rule 13a-15(e) of the Securities Exchange Act of 1934 as amended (Exchange Act), as of September 30, 2024. Based on this evaluation, the chief executive officer and chief financial officer concluded that our disclosure controls and procedures are effective in timely alerting them to material information relating to us (including our consolidated subsidiaries) that is required to be included in our periodic SEC filings. No material weaknesses in our disclosure controls and procedures were identified in the evaluation and therefore, no corrective actions were taken. There were no significant changes in our internal controls or in other factors that could significantly affect these controls subsequent to the date of their evaluation.

Changes in Internal Control Over Financial Reporting

During third-quarter 2024, the Company implemented a new financial system including the general ledger and financial reporting tools to provide advanced data analytic capabilities and improve efficiency of the financial reporting process. This initiative was not undertaken in response to any actual or perceived deficiencies or to remedy any gaps or weaknesses in the Company's internal control over financial reporting. Concurrent with the implementation, changes were made to the relevant business processes and the related control activities over the implementation in order to maintain appropriate controls over financial reporting. There were no other changes in our internal control over financial reporting (as defined in Rule 13a-15(f) under the Exchange Act) during the period covered by this Quarterly Report on Form 10-Q that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.


Horace Mann Educators Corporation			57			Third Quarter 2024 Form 10-Q

PART II: OTHER INFORMATION

ITEM 1. I Legal Proceedings

For a description of noteworthy litigation, see Part I - Item 1, Note 10 of the Consolidated Financial Statements of this Quarterly Report on Form 10-Q.

ITEM 1A. I Risk Factors

At the time of issuance of this Quarterly Report on Form 10-Q, we believe there are no material changes from the risk factors as previously disclosed in Part I - Item 1A of our Annual Report on Form 10-K for the year ended December 31, 2023.

ITEM 2. I Unregistered Sales of Equity Securities and Use of Proceeds

Issuer Purchases of Equity Securities

On May 25, 2022, our Board of Directors authorized a share repurchase program allowing repurchases of up to $50 million our common shares in open market or privately negotiated transactions, from time to time, depending on market conditions (Program). The Program does not have an expiration date and may be limited or terminated at any time without notice. During the three months ended September 30, 2024, we repurchased shares under the Program as follows:


Period	Total Number of Shares Purchased	Average Price Paid per Share		Total Number of Shares Purchased under the Program	Approximate Dollar Value of Shares that may yet be Purchased under the Program
July 1 - 31	81,072	$	32.89	81,072	$	27.5	million
August 1 - 31	34,126	33.36		34,126	$	26.3	million
September 1 - 30	179	33.02		179	$	26.3	million
Total	115,377	$	33.33	115,377	$	26.3	million

ITEM 5. I Other Information

Securities Trading Plans of Executive Officers and Directors

Rule 10b5-1 under the Exchange Act provides an affirmative defense that enables prearranged transactions in Company securities in a manner that avoids concerns about initiating transactions at a future date while possibly in possession of material nonpublic information. Our Insider Trading Policy permits our executive officers and directors to enter into trading plans designed to comply with Rule 10b5-1.

During the three months ended September 30, 2024, Beverley McClure adopted a new 10b5-1 plan. The Plan was adopted on August 12, 2024. The Plan expires on the earlier of April 4, 2025, or upon execution of all trades or expiration of all orders relating to such trades. The Plan allows for the sale of up to 11,267 shares.

During the three months ended September 30, 2024, no other director or officer of the Company who is required to file reports under Section 16 of the Exchange Act adopted, modified, or terminated a “Rule 10b5-1 trading arrangement” or “non-Rule 10b5-1 trading arrangement,” as each term is defined in Item 408(a) of Regulation S-K.


Horace Mann Educators Corporation			58			Third Quarter 2024 Form 10-Q

ITEM 6. I Exhibits

The following items are filed as Exhibits. Management contracts and compensatory plans are indicated by an asterisk (*).


Exhibit
No.						Description

(3) Articles of incorporation and bylaws:

3.1						Restated Certificate of Incorporation of HMEC, filed with the Delaware Secretary of State on June 24, 2003, incorporated by reference to Exhibit 3.1 to HMEC’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2003, filed with the Securities and Exchange Commission (the "SEC") on August 14, 2003.

3.2						2024 Amended and Restated Bylaws of HMEC, incorporated by reference to Exhibit 3.1 to HMEC’s 8-K filing filed with the SEC on September 23, 2024.

(4) Instruments defining the rights of security holders, including indentures:

4.1						Indenture, dated as of November 23, 2015, by and between HMEC and The Bank of New York Mellon Trust Company, N.A., as trustee, incorporated by reference to Exhibit 4.1 to HMEC’s Current Report on Form 8-K dated November 18, 2015, filed with the SEC on November 23, 2015.

4.1(a)						Form of HMEC 4.500% Senior Notes due 2025, incorporated by reference to Exhibit 4.2 to HMEC’s Current Report on Form 8-K dated November 18, 2015, filed with the SEC on November 23, 2015.

4.1(b)						Form of HMEC 7.25 % Senior Notes due 2028, incorporated by reference to Exhibit 4.2 to HMEC’s Current Report on Form 8-K dated September 12, 2023, filed with the SEC on September 15, 2023.

4.2						Certificate of Designations for HMEC Series A Cumulative Convertible Preferred Stock, incorporated by reference to Exhibit 4.3 to HMEC’s Annual Report on Form 10-K for the year ended December 31, 2005, filed with the SEC on March 16, 2006.

4.3						Description of Securities, incorporated by reference to Exhibit 4.3 to HMEC's Annual Report on Form 10-K for the year ended December 31, 2019, filed with the SEC on March 2, 2020.

(10) Material contracts:

10.1						Credit Agreement dated as of June 21, 2019 among HMEC, certain financial institutions named therein and PNC Bank, N.A., as administrative agent, incorporated by reference to Exhibit 10.1 to HMEC’s Current Report on Form 8-K dated June 24, 2019, filed with the SEC on June 24, 2019.

10.1(a)						First Amendment to Credit Agreement dated as of June 21, 2019 among HMEC, certain financial institutions named therein and PNC Bank, N.A., as administrative agent, incorporated by reference to Exhibit 10.1(a) to HMEC's Annual Report on Form 10-K for the year ended December 31, 2019, filed with the SEC on March 2, 2020.


Horace Mann Educators Corporation			59			Third Quarter 2024 Form 10-Q


10.1(b)						Second Amendment to Credit Agreement dated as of July 12, 2021, among HMEC, as borrower, PNC Bank, National Association, as administrative agent, and certain lenders party thereto, incorporated by reference to Exhibit 10.1(b) to HMEC's Current Report on Form 8-K dated July 14, 2021, filed with the SEC on July 14, 2021.

10.2*						Horace Mann Educators Corporation Amended and Restated 2002 Incentive Compensation Plan ("2002 Incentive Compensation Plan"), incorporated by reference to Exhibit 10.2 to HMEC’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2005, filed with the SEC on August 9, 2005.

10.2(a)*						Revised Specimen Employee Stock Option Agreement under the 2002 Incentive Compensation Plan, incorporated by reference to Exhibit 10.6(b) to HMEC’s Annual Report on Form 10-K for the year ended December 31, 2008, filed with the SEC on March 2, 2009.

10.2(b)*						Specimen Employee Restricted Stock Unit Agreement under the 2002 Incentive Compensation Plan, incorporated by reference to Exhibit 10.6(d) to HMEC’s Annual Report on Form 10-K for the year ended December 31, 2005, filed with the SEC on March 16, 2006.

10.2(c)*						Revised Specimen Employee Restricted Stock Unit Agreement under the 2002 Incentive Compensation Plan, incorporated by reference to Exhibit 10.6(f) to HMEC’s Annual Report on Form 10-K for the year ended December 31, 2008, filed with the SEC on March 2, 2009.

10.2(d)*						Specimen Non-employee Director Restricted Stock Unit Agreement under the 2002 Incentive Compensation Plan, incorporated by reference to Exhibit 10.6(e) to HMEC’s Annual Report on Form 10-K for the year ended December 31, 2005, filed with the SEC on March 16, 2006.

10.2(e)*						Revised Specimen Non-employee Director Restricted Stock Unit Agreement under the 2002 Incentive Compensation Plan, incorporated by reference to Exhibit 10.6(h) to HMEC’s Annual Report on Form 10-K for the year ended December 31, 2008, filed with the SEC on March 2, 2009.

10.3*						HMEC 2010 Comprehensive Executive Compensation Plan (As Amended and Restated Effective March 3, 2021), incorporated by reference to Exhibit 1 (beginning on page 59) to HMEC’s Proxy Statement, filed with the SEC on April 8, 2021.

10.3(a)*						HMEC 2010 Comprehensive Executive Compensation Plan (As Amended and Restated Effective May 20, 2015) (Section 16 Officer) Non-Qualified Stock Option Agreement - Employee Grantee, incorporated by reference to Exhibit 10.3(a) to HMEC's Quarterly Report on Form 10-Q for the quarter ended March 31, 2017, filed with the SEC on May 9, 2017.

10.3(b)*						HMEC 2010 Comprehensive Executive Compensation Plan (As Amended and Restated Effective May 20, 2015) (Section 16 Officer) Non-Qualified Stock Option Agreement - Employee Grantee (with Retirement Provision), incorporated by reference to Exhibit 10.3(b) to HMEC's Quarterly Report on Form 10-Q for the quarter ended March 31, 2023, filed with the SEC on May 10, 2023.

10.3(c)*						HMEC 2010 Comprehensive Executive Compensation Plan (As Amended and Restated Effective May 20, 2015) Service-Vested Restricted Stock Units Agreement - Employee Grantee, incorporated by reference to Exhibit 10.3(c) to HMEC's Quarterly Report on Form 10-Q for the quarter ended March 31, 2017, filed with the SEC on May 9, 2017.

10.3(d)*						HMEC 2010 Comprehensive Executive Compensation Plan (As Amended and Restated Effective May 20, 2015) Service-based Restricted Stock Units Agreement - Employee Grantee (with Retirement Provision), incorporated by reference to Exhibit 10.3(d) to HMEC's Quarterly Report on Form 10-Q for the quarter ended March 31, 2023, filed with the SEC on May 10, 2023.


Horace Mann Educators Corporation			60			Third Quarter 2024 Form 10-Q


10.3(e)*						HMEC 2010 Comprehensive Executive Compensation Plan (As Amended and Restated Effective May 20, 2015) Performance-Based Restricted Stock Units Agreement - Employee Grantee, incorporated by reference to Exhibit 10.3(d) to HMEC's Quarterly Report on Form 10-Q for the quarter ended March 31, 2022, filed with the SEC on May 9, 2022.

10.3(f)*						HMEC 2010 Comprehensive Executive Compensation Plan (As Amended and Restated Effective May 20, 2015) Performance-Based Restricted Stock Units Agreement - Employee Grantee (with Retirement Provision), incorporated by reference to Exhibit 10.3(f) to HMEC's Quarterly Report on Form 10-Q for the quarter ended March 31, 2023, filed with the SEC on May 10, 2023.

10.3(g)*						HMEC 2010 Comprehensive Executive Compensation Plan (As Amended and Restated Effective May 20, 2015) Performance-Based Restricted Stock Units Agreement - Employee Grantee (with Retirement Provision and ESG Modifier), incorporated by reference to Exhibit 10.3(g) to HMEC's Quarterly Report on Form 10-Q for the quarter ended March 31, 2023, filed with the SEC on May 10, 2023.

10.3(h)*						HMEC 2010 Comprehensive Executive Compensation Plan (As Amended and Restated Effective May 20, 2015) Service-Vested Restricted Stock Units Agreement - Employee Grantee (One-Time Grant Service), incorporated by reference to Exhibit 10.3(e) to HMEC's Quarterly Report on Form 10-Q for the quarter ended March 31, 2017, filed with the SEC on May 9, 2017.

10.3(i)*						Specimen Employee Performance-Based Restricted Stock Units Agreement - Key Strategic Grantee under the HMEC 2010 Comprehensive Executive Compensation Plan incorporated by reference to Exhibit 10.3(e) to HMEC’s Quarterly Report on Form 10-Q for the quarter ended March 31, 2016, filed with the SEC on May 6, 2016.

10.3(j)*						Specimen Non-employee Director Restricted Stock Unit Agreement under the HMEC 2010 Comprehensive Executive Compensation Plan, incorporated by reference to Exhibit 10.17(a) to HMEC’s Current Report on Form 8-K dated May 27, 2010, filed with the SEC on June 2, 2010.

10.4*						Horace Mann Supplemental Employee Retirement Plan, 2002 Restatement, incorporated by reference to Exhibit 10.1 to HMEC’s Quarterly Report on Form 10-Q for the quarter ended March 31, 2002, filed with the SEC on May 15, 2002.

10.5*						Horace Mann Executive Supplemental Employee Retirement Plan, 2002 Restatement, incorporated by reference to Exhibit 10.2 to HMEC’s Quarterly Report on Form 10-Q for the quarter ended March 31, 2002, filed with the SEC on May 15, 2002.

10.6*						Amended and Restated Horace Mann Nonqualified Supplemental Money Purchase Pension Plan, incorporated by reference to Exhibit 10.9 to HMEC’s Annual Report on Form 10-K for the year ended December 31, 2008, filed with the SEC on March 2, 2009.

10.7*						Summary of HMEC Non-employee Director Compensation, incorporated by reference to Exhibit 10.7 to HMEC's Quarterly Report on Form 10-Q for the quarter ended June, 30, 2022, filed with the SEC on August 8, 2022.

10.8*						Summary of HMEC Named Executive Officer Annualized Salaries, incorporated by reference to Exhibit 10.8 to HMEC's Quarterly Report on Form 10-Q for the quarter ended March 31, 2024, filed with the SEC on May 8, 2024.

10.9*						Form of Severance Agreement between HMEC, Horace Mann Service Corporation ("HMSC") and certain officers of HMEC and/or HMSC, incorporated by reference to Exhibit 10.13 to HMEC’s Annual Report on Form 10-K for the year ended December 31, 2012, filed with the SEC on February 28, 2013.

10.10*						HMSC Executive Change in Control Plan, incorporated by reference to Exhibit 10.15 to HMEC’s Current Report on Form 8-K dated February 15, 2012, filed with the SEC on February 22, 2012.


Horace Mann Educators Corporation			61			Third Quarter 2024 Form 10-Q



10.10(a)*						HMSC Executive Change in Control Plan Schedule A Plan Participants, incorporated by reference to Exhibit 10.10(a) to HMEC's Quarterly Report on Form 10-Q for the quarter ended March 31, 2024, filed with the SEC on May 8, 2024.

10.11*						HMSC Executive Severance Plan, incorporated by reference to Exhibit 10.16 to HMEC’s Current Report on Form 8-K dated March 7, 2012, filed with the SEC on March 13, 2012.

10.11(a)*						First Amendment to the HMSC Executive Severance Plan, incorporated by reference to Exhibit 10.16(a) to HMEC’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2012, filed with the SEC on August 9, 2012.

10.11(b)*						HMSC Executive Severance Plan Schedule A Participants, incorporated by reference to Exhibit 10.11(b) to HMEC's Quarterly Report on Form 10-Q for the quarter ended March 31, 2024, filed with the SEC on May 8, 2024.

10.12						Stock Purchase Agreement Among Horace Mann Educators Corporation, and Robert Paglione, Paglione Family Irrevocable Trust F/B/O Adam Paglione, Paglione Family Irrevocable Trust F/B/O Lisa and Jorge Arroyo, Beau Adams and Benefit Consultants Group, Inc. dated as of October 30, 2018, incorporated by reference to Exhibit 10.12 to HMEC's Annual Report on Form 10-K for the year ended December 31, 2018, filed with the SEC on March 1, 2019.

10.13						Purchase Agreement By and Among Ellard Family Holdings, Inc., Brian M. Ellard, The JCE Exempt Trust and Horace Mann Educators Corporation dated as of December 10, 2018, incorporated by reference to Exhibit 10.13 to HMEC's Annual Report on Form 10-K for the year ended December 31, 2018, filed with the SEC on March 1, 2019.

10.14						Stock Purchase Agreement for Madison National Life, incorporated by reference to Exhibit 10.14 to HMEC's Quarterly Report on Form 10-Q for the quarter ended September 30, 2021, filed with the SEC on November 5, 2021.

10.15						Executive employment offer letter to Stephen J. McAnena, Chief Operating Officer, dated April 4, 2023, incorporated by reference to Exhibit 10.15 to HMEC's Quarterly Report on Form 10-Q for the quarter ended June 30, 2023, filed with the SEC on August 8, 2023.

(31) Certification pursuant to Section 302 of the Sarbanes-Oxley Act of 2002:

31.1						Certification by Marita Zuraitis, Chief Executive Officer of HMEC.

31.2						Certification by Ryan E. Greenier, Chief Financial Officer of HMEC.

(32) Certification pursuant to Section 906 of the Sarbanes-Oxley Act of 2002:

32.1						Certification by Marita Zuraitis, Chief Executive Officer of HMEC.

32.2						Certification by Ryan E. Greenier, Chief Financial Officer of HMEC.

(99) Additional exhibits:

99.1						Glossary of Selected Terms.

(101) Interactive Data File:

101.INS						XBRL Instance Document - the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document


Horace Mann Educators Corporation			62			Third Quarter 2024 Form 10-Q



101.SCH						XBRL Taxonomy Extension Schema

101.CAL						XBRL Taxonomy Extension Calculation Linkbase

101.DEF						XBRL Taxonomy Extension Definition Linkbase

101.LAB						XBRL Taxonomy Extension Label Linkbase

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Horace Mann Educators Corporation			63			Third Quarter 2024 Form 10-Q

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.


		HORACE MANN EDUCATORS CORPORATION
		(Registrant)






Date	November 4, 2024	/s/ Marita Zuraitis

		Marita Zuraitis
		President and Chief Executive Officer






Date	November 4, 2024	/s/ Ryan E. Greenier

		Ryan E. Greenier
		Executive Vice President and
		Chief Financial Officer






Date	November 4, 2024	/s/ Kimberly A. Johnson

		Kimberly A. Johnson
		Senior Vice President, Controller and
		Principal Accounting Officer


Horace Mann Educators Corporation			64			Third Quarter 2024 Form 10-Q

Horace Mann Educators - 10-Q quarterly report FY2024 Q3

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