|
Delaware
|
37-0911756
|
|
(State or other jurisdiction of incorporation or organization)
|
(I.R.S. Employer Identification No.)
|
|
|
|
Name of each exchange on
|
|
Title of each class
|
Trading Symbol
|
which registered
|
|
Common Stock, par value $0.001 per share
|
HMN
|
New York Stock Exchange
|
|
Large accelerated filer
|
☑
|
|
Accelerated filer
|
☐
|
|
Non-accelerated filer
|
☐
|
|
Smaller reporting company
|
☐
|
|
|
|
|
Emerging growth company
|
☐
|
|
Part
|
|
Item
|
|
|
|
Page
|
|
|
|
|
||||
|
|
|
|
|
|
||
|
|
|
|
|
|
||
|
|
|
|
|
|
||
|
|
|
|
|
|
||
|
|
|
|
|
|
||
|
|
|
|
|
|
||
|
|
|
|
|
|
||
|
|
|
|
|
|
||
|
|
|
|
|
|
||
|
|
|
|
|
|
||
|
|
|
|
|
|
||
|
|
|
|
|
|||
|
|
|
|
|
|||
|
|
|
|
|
|||
|
|
|
|
|
|||
|
|
|
|
|
|||
|
|
|
|
||||
|
|
|
|
|
|||
|
|
|
|
|
|||
|
|
|
|
|
|
||
|
|
|
|
|
|
||
|
|
|
|
|
|
||
|
|
|
|
|
|
||
|
|
|
|
|
|
||
|
|
|
|
|
|
||
|
|
|
|
|
|
||
|
|
|
|
|
|
||
|
|
|
|
|
|
||
|
|
|
|
|
|||
|
|
|
|
|
|||
|
|
|
|
|
|
||
|
|
|
|
|
|||
|
|
|
|
|
|||
|
|
|
|
||||
|
|
|
|
|
|||
|
|
|
|
|
|||
|
|
|
|
|
|||
|
|
|
|
|
|||
|
|
|
|
||||
|
|
|
|
|
|||
|
|
|
|
||||
|
•
|
personal lines of property and casualty insurance, primarily automobile and property coverages
|
|
•
|
supplemental insurance, primarily heart, cancer, accident and limited short-term supplemental disability coverages
|
|
•
|
retirement products, primarily tax-qualified annuities
|
|
•
|
life insurance, primarily whole life, term and indexed universal life (IUL)
|
|
Horace Mann Educators Corporation
|
|
Annual Report on Form 10-K 1
|
|
2 Annual Report on Form 10-K
|
|
Horace Mann Educators Corporation
|
|
•
|
Products designed to meet educators’ needs and protect their unique risks;
|
|
•
|
Knowledgeable, trusted distribution tailored to educator preferences; and,
|
|
•
|
Modern, scalable infrastructure that is easy to do business with.
|
|
Horace Mann Educators Corporation
|
|
Annual Report on Form 10-K 3
|
|
4 Annual Report on Form 10-K
|
|
Horace Mann Educators Corporation
|
|
Year
|
|
Month
|
|
Event Description
|
|
States/Region
|
|
Total
|
||
|
2019
|
|
|
|
|
|
|
|
$
|
52.0
|
|
|
|
|
May
|
|
Wind and Hail
|
|
CO, IA, IL, IN, KS, MO, NE, OH, OK, PA, WY
|
|
5.5
|
|
|
|
|
|
|
|
Other single events less than $5.0 million
|
|
|
|
46.5
|
|
|
|
2018
|
|
|
|
|
|
|
|
$
|
114.1
|
|
|
|
|
March
|
|
Winter Storm
|
|
Northeastern U.S.
|
|
3.5
|
|
|
|
|
|
June
|
|
Wind and Hail
|
|
CO, UT
|
|
8.2
|
|
|
|
|
|
July
|
|
Carr Fire
|
|
CA
|
|
5.9
|
|
|
|
|
|
September
|
|
Hurricane Florence
|
|
Southeast and Mid-Atlantic
|
|
11.4
|
|
|
|
|
|
October
|
|
Hurricane Michael
|
|
Southeastern U.S.
|
|
4.5
|
|
|
|
|
|
November
|
|
Camp Fire
|
|
CA
|
|
31.2
|
|
|
|
|
|
|
|
Other single events less than $5.0 million
|
|
|
|
49.4
|
|
|
|
2017
|
|
|
|
|
|
|
|
$
|
61.8
|
|
|
|
|
May
|
|
Wind, Hail, Tornado
|
|
CO
|
|
10.0
|
|
|
|
|
|
June
|
|
Wind and Hail
|
|
MN (primarily)
|
|
10.0
|
|
|
|
|
|
August
|
|
Hurricane Harvey
|
|
Southeastern U.S.
|
|
4.8
|
|
|
|
|
|
August
|
|
Hurricane Irma
|
|
Eastern U.S.
|
|
3.0
|
|
|
|
|
|
|
|
Other single events less than $5.0 million
|
|
|
|
34.0
|
|
|
|
2016
|
|
|
|
|
|
|
|
$
|
60.0
|
|
|
|
|
April
|
|
Wind and Hail
|
|
FL, TX
|
|
9.3
|
|
|
|
|
|
September
|
|
Hurricane Matthew
|
|
Southeastern U.S.
|
|
10.0
|
|
|
|
|
|
|
|
Other single events less than $5.0 million
|
|
|
|
40.7
|
|
|
|
2015
|
|
|
|
|
|
|
|
$
|
44.4
|
|
|
|
|
February
|
|
Winter Storm
|
|
Midwest & Eastern U.S.
|
|
8.9
|
|
|
|
|
|
|
|
Other single events less than $5.0 million
|
|
|
|
35.5
|
|
|
|
(1)
|
Net of reinsurance and before income tax benefits. Includes allocated loss adjustment expenses and reinsurance reinstatement premiums; excludes unallocated loss adjustment expenses.
|
|
Horace Mann Educators Corporation
|
|
Annual Report on Form 10-K 5
|
|
(1)
|
Claims and claim expenses incurred include the impact of prior years' reserve development as quantified in Property and Casualty reserves. Catastrophe totals are net of reinsurance and before income tax benefits.
|
|
(2)
|
Excludes 2018 reinsurance reinstatement premiums.
|
|
6 Annual Report on Form 10-K
|
|
Horace Mann Educators Corporation
|
|
A.M. Best Rating
|
|
S&P Rating
|
|
Reinsurer
|
|
Parent
|
|
2020
|
|
2019
|
|
|
A
|
|
A+
|
|
Lloyd's of London Syndicates
|
|
|
|
22%
|
|
28%
|
|
|
A+
|
|
AA-
|
|
Swiss Re Underwriters Agency, Inc.
|
|
Swiss Re Ltd.
|
|
10%
|
|
7%
|
|
|
NR
|
|
AA-
|
|
R+V Versicherung AG
|
|
DZ BANK AG
|
|
9%
|
|
8%
|
|
|
A+
|
|
AA-
|
|
SCOR Global P&C SE
|
|
SCOR SE
|
|
7%
|
|
7%
|
|
|
Horace Mann Educators Corporation
|
|
Annual Report on Form 10-K 7
|
|
8 Annual Report on Form 10-K
|
|
Horace Mann Educators Corporation
|
|
Horace Mann Educators Corporation
|
|
Annual Report on Form 10-K 9
|
|
10 Annual Report on Form 10-K
|
|
Horace Mann Educators Corporation
|
|
Horace Mann Educators Corporation
|
|
Annual Report on Form 10-K 11
|
|
12 Annual Report on Form 10-K
|
|
Horace Mann Educators Corporation
|
|
•
|
Products designed to meet educators’ needs and protect their unique risks;
|
|
•
|
Knowledgeable, trusted distribution tailored to educator preferences; and
|
|
•
|
Modern, scalable infrastructure that is easy to do business with.
|
|
Horace Mann Educators Corporation
|
|
Annual Report on Form 10-K 13
|
|
($ in millions)
|
|
% of Total
Carrying
Value
|
|
Carrying Value
|
|
|
|||||||||||||||||
|
|
|
|
Total
|
|
Life and
Retirement
|
|
Supplemental
|
|
Property and
Casualty (7)
|
|
Amortized
Cost or Cost (8)
|
||||||||||||
|
Publicly Traded Fixed Maturity Securities, Equity
Securities and Short-term Investments:
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
|
U.S. Government and agency obligations: (1)
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
|
Mortgage-backed securities
|
|
10.9
|
%
|
|
$
|
724.3
|
|
|
$
|
547.9
|
|
|
$
|
130.0
|
|
|
$
|
46.4
|
|
|
$
|
684.5
|
|
|
Other, including U.S. Treasury securities
|
|
6.9
|
|
|
458.9
|
|
|
440.7
|
|
|
6.6
|
|
|
11.6
|
|
|
436.7
|
|
|||||
|
Investment grade corporate and public utility
bonds
|
|
17.7
|
|
|
1,173.8
|
|
|
797.5
|
|
|
174.9
|
|
|
201.4
|
|
|
1,074.8
|
|
|||||
|
Non-investment grade corporate and
public utility bonds (2)
|
|
1.1
|
|
|
72.6
|
|
|
40.4
|
|
|
7.1
|
|
|
25.1
|
|
|
70.1
|
|
|||||
|
Investment grade municipal bonds
|
|
24.0
|
|
|
1,592.9
|
|
|
1,105.5
|
|
|
78.0
|
|
|
409.4
|
|
|
1,457.9
|
|
|||||
|
Non-investment grade municipal bonds (2)
|
|
0.5
|
|
|
34.5
|
|
|
17.1
|
|
|
—
|
|
|
17.4
|
|
|
32.4
|
|
|||||
|
Investment grade other mortgage-backed
securities (3)
|
|
18.0
|
|
|
1,195.4
|
|
|
958.6
|
|
|
56.3
|
|
|
180.5
|
|
|
1,188.7
|
|
|||||
|
Non-investment grade other mortgage-backed
securities (2)(3)
|
|
0.5
|
|
|
31.0
|
|
|
24.4
|
|
|
0.5
|
|
|
6.1
|
|
|
28.4
|
|
|||||
|
Foreign government bonds
|
|
0.7
|
|
|
45.4
|
|
|
43.9
|
|
|
—
|
|
|
1.5
|
|
|
42.8
|
|
|||||
|
Redeemable preferred stock, all investment
grade
|
|
0.4
|
|
|
24.3
|
|
|
23.5
|
|
|
0.8
|
|
|
—
|
|
|
21.9
|
|
|||||
|
Equity securities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
|
Non-redeemable preferred stocks,
all investment grade
|
|
0.9
|
|
|
60.4
|
|
|
57.9
|
|
|
1.4
|
|
|
1.1
|
|
|
60.4
|
|
|||||
|
Common stocks
|
|
0.3
|
|
|
20.1
|
|
|
0.1
|
|
|
—
|
|
|
20.0
|
|
|
20.1
|
|
|||||
|
Closed-end fund
|
|
0.3
|
|
|
21.4
|
|
|
21.4
|
|
|
—
|
|
|
—
|
|
|
21.4
|
|
|||||
|
Short-term investments (4)
|
|
2.6
|
|
|
172.7
|
|
|
113.6
|
|
|
57.5
|
|
|
1.6
|
|
|
172.7
|
|
|||||
|
Total publicly traded securities
|
|
84.8
|
|
|
5,627.7
|
|
|
4,192.5
|
|
|
513.1
|
|
|
922.1
|
|
|
5,312.8
|
|
|||||
|
Other Invested Assets:
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
|
Investment grade private placements
|
|
5.8
|
|
|
385.8
|
|
|
377.4
|
|
|
8.4
|
|
|
—
|
|
|
368.0
|
|
|||||
|
Non-investment grade private placements (2)
|
|
0.8
|
|
|
52.8
|
|
|
50.2
|
|
|
2.6
|
|
|
—
|
|
|
50.8
|
|
|||||
|
Mortgage loans (5)
|
|
0.1
|
|
|
9.8
|
|
|
9.8
|
|
|
—
|
|
|
—
|
|
|
9.8
|
|
|||||
|
Policy loans (5)
|
|
2.3
|
|
|
153.5
|
|
|
152.7
|
|
|
0.8
|
|
|
—
|
|
|
153.5
|
|
|||||
|
Limited partnership interests
|
|
5.8
|
|
|
383.7
|
|
|
253.1
|
|
|
16.0
|
|
|
114.6
|
|
|
383.7
|
|
|||||
|
Other
|
|
0.4
|
|
|
25.9
|
|
|
24.9
|
|
|
—
|
|
|
1.0
|
|
|
25.9
|
|
|||||
|
Total other invested assets
|
|
15.2
|
|
|
1,011.5
|
|
|
868.1
|
|
|
27.8
|
|
|
115.6
|
|
|
991.7
|
|
|||||
|
Total investments (6)
|
|
100.0
|
%
|
|
$
|
6,639.2
|
|
|
$
|
5,060.6
|
|
|
$
|
540.9
|
|
|
$
|
1,037.7
|
|
|
$
|
6,304.5
|
|
|
(1)
|
All investment grade that includes $494.9 million fair value of investments guaranteed by the full faith and credit of the U.S. Government and $688.3 million fair value of federally sponsored agency securities which are not backed by the full faith and credit of the U.S. Government.
|
|
(2)
|
A non-investment grade rating is assigned to a security when it is acquired or when it is downgraded from investment grade, primarily on the basis of the S&P rating for such security, or if there is no S&P rating, the Moody's Investors Service, Inc. (Moody's) or Fitch Ratings, Inc. (Fitch) rating for such security, or if there is no S&P, Moody's or Fitch rating, the National Association of Insurance Commissioners' (NAIC) rating for such security. The rating agencies monitor securities and their issuers regularly, and make changes to the ratings as necessary. The Company incorporates rating changes on a monthly basis.
|
|
(3)
|
Includes commercial mortgage-backed securities, asset-backed securities, other mortgage-backed securities and collateralized loan obligations.
|
|
(4)
|
Short-term investments mature within one year of being acquired and are carried at cost, which approximates fair value. Short-term investments of $172.7 million are all money market funds and not rated.
|
|
(5)
|
Mortgage and policy loans are carried at amortized cost or unpaid principal balance.
|
|
(6)
|
Approximately 7.0% of the Company's investment portfolio, having a carrying value of $462.8 million as of December 31, 2019, consisted of securities with some form of credit support, such as insurance. Of the securities with credit support as of December 31, 2019, municipal bonds represented $349.1 million carrying value.
|
|
(7)
|
Includes $1.4 million of short-term investments held in Corporate and Other.
|
|
(8)
|
The values of limited partnership interests are carried using the equity method of accounting which approximates fair value.
|
|
14 Annual Report on Form 10-K
|
|
Horace Mann Educators Corporation
|
|
|
|
% of Fixed Maturity
Securities Portfolio
|
|
% of Total
Investment Portfolio
|
||
|
Investment grade
|
|
96.4
|
%
|
|
84.0
|
%
|
|
Non-investment grade
|
|
3.6
|
%
|
|
3.2
|
%
|
|
|
|
|
|
|
||
|
Average quality
|
|
A+
|
|
|
A+
|
|
|
Average option-adjusted duration
|
|
6.0
|
|
|
6.0
|
|
|
Percent maturing in next 5 years
|
|
31.1
|
%
|
|
27.1
|
%
|
|
Horace Mann Educators Corporation
|
|
Annual Report on Form 10-K 15
|
|
16 Annual Report on Form 10-K
|
|
Horace Mann Educators Corporation
|
|
•
|
interest rate risk, which is the risk that interest rates will decline and funds reinvested will earn less than expected;
|
|
•
|
market value risk, which is the risk that invested assets will decrease in value due to changes in yields realized on the assets and prevailing market yields for similar assets, an unfavorable change in the liquidity of the asset or an unfavorable change in the financial prospects or a downgrade in the credit rating of the issuer of the asset;
|
|
Horace Mann Educators Corporation
|
|
Annual Report on Form 10-K 17
|
|
•
|
credit risk, which is the risk that the value of certain investments become impaired due to deterioration in the financial condition of one or more issuers of those instruments or the deterioration in performance or credit quality of the underlying collateral of certain structured securities and, ultimately, the risk of permanent loss in the event of default by an issuer or underlying credit;
|
|
•
|
market fundamentals risk, which is the risk that there are changes in the market that can have an unfavorable impact on securities valuation such as availability of credit in the capital markets, re-pricing of credit risk, reduced market liquidity due to broker-dealers' unwillingness to hold inventory, and increased market volatility;
|
|
•
|
concentration risk, which is the risk that the portfolio may be too heavily concentrated in the securities of one or more issuers, sectors or industries, which could result in a significant decrease in the value of the portfolio in the event of deterioration in the financial condition of those issuers or the market value of their securities;
|
|
•
|
liquidity risk, which is the risk that liabilities are surrendered or mature sooner than anticipated requiring the sale of assets at an undesirable time to provide for policyholder surrenders, withdrawals or claims; and,
|
|
•
|
regulatory risk, which is the risk that regulatory bodies or governments, in the U.S. or in other countries, may make substantial investments or take significant ownership positions in, or ultimately nationalize, financial institutions or other issuers of securities held in the Company's investment portfolio, which could adversely impact the seniority or contractual terms of the securities. Regulatory risk could also come from changes in tax laws or bankruptcy laws that could adversely impact the valuation and/or after tax yields of certain invested assets.
|
|
18 Annual Report on Form 10-K
|
|
Horace Mann Educators Corporation
|
|
•
|
the proximity of the catastrophe occurrence date to the date of the Company's estimate;
|
|
•
|
potential inflation of property repair costs in the affected area;
|
|
•
|
the occurrence of multiple catastrophes in a geographic area over a relatively short period of time; and
|
|
•
|
the outcome of litigation which may be filed against the Company by policyholders, state attorneys general and other parties relative to loss coverage disputes and loss settlement payments.
|
|
Horace Mann Educators Corporation
|
|
Annual Report on Form 10-K 19
|
|
20 Annual Report on Form 10-K
|
|
Horace Mann Educators Corporation
|
|
•
|
the ability to maintain appropriate interest rate spreads over the rates guaranteed in fixed annuity and life products;
|
|
•
|
the book yield of the investment portfolio; and
|
|
•
|
the net unrealized investment gains (losses) in the portfolio and the related after tax effect on shareholders' equity and total capital.
|
|
Horace Mann Educators Corporation
|
|
Annual Report on Form 10-K 21
|
|
•
|
Call options purchased to fund the annual index credits on FIA and IUL products are carried at fair value. Fair value is based on the amount of cash expected to be received to settle the call options adjusted for the nonperformance risk of the counterparty. Changes in fair value of derivatives include the gains or losses recognized at expiration of the option term or upon early termination as well as changes in fair value for open positions.
|
|
•
|
FIA contractual obligations for future annual index credits are accounted for as a "series of embedded derivatives" over the expected lives of the applicable contracts. Increases or decreases in the fair value of embedded derivatives generally correspond to increases or decreases in equity market performance and changes in interest rates used to discount the excess of the projected policy contract values over the projected minimum guaranteed contract values.
|
|
•
|
The IUL contractual obligations for future index credits are set equal to the fair value of outstanding 12 month derivatives held in support of the applicable contracts.
|
|
22 Annual Report on Form 10-K
|
|
Horace Mann Educators Corporation
|
|
•
|
the inability to successfully integrate the businesses and distribution force of NTA in a manner that permits the Company to achieve the full revenue and cost savings desired from the acquisition;
|
|
•
|
complexities associated with managing the larger, more complex, business;
|
|
•
|
loss of key employees; and,
|
|
•
|
the disruption of, or the loss of momentum in, each company's ongoing business.
|
|
Horace Mann Educators Corporation
|
|
Annual Report on Form 10-K 23
|
|
24 Annual Report on Form 10-K
|
|
Horace Mann Educators Corporation
|
|
Horace Mann Educators Corporation
|
|
Annual Report on Form 10-K 25
|
|
26 Annual Report on Form 10-K
|
|
Horace Mann Educators Corporation
|
|
Horace Mann Educators Corporation
|
|
Annual Report on Form 10-K 27
|
|
28 Annual Report on Form 10-K
|
|
Horace Mann Educators Corporation
|
|
Horace Mann Educators Corporation
|
|
Annual Report on Form 10-K 29
|
|
30 Annual Report on Form 10-K
|
|
Horace Mann Educators Corporation
|
|
Horace Mann Educators Corporation
|
|
Annual Report on Form 10-K 31
|
|
|
|
Market Price
|
|
Dividend
|
||||||||
|
Fiscal Period
|
|
High
|
|
Low
|
|
Paid
|
||||||
|
2019:
|
|
|
|
|
|
|
||||||
|
Fourth Quarter
|
|
$
|
45.87
|
|
|
$
|
42.83
|
|
|
$
|
0.2875
|
|
|
Third Quarter
|
|
47.68
|
|
|
40.87
|
|
|
0.2875
|
|
|||
|
Second Quarter
|
|
41.83
|
|
|
35.23
|
|
|
0.2875
|
|
|||
|
First Quarter
|
|
42.18
|
|
|
34.68
|
|
|
0.2875
|
|
|||
|
2018:
|
|
|
|
|
|
|
||||||
|
Fourth Quarter
|
|
$
|
43.60
|
|
|
$
|
35.81
|
|
|
$
|
0.2850
|
|
|
Third Quarter
|
|
46.56
|
|
|
42.66
|
|
|
0.2850
|
|
|||
|
Second Quarter
|
|
45.12
|
|
|
40.77
|
|
|
0.2850
|
|
|||
|
First Quarter
|
|
43.86
|
|
|
37.68
|
|
|
0.2850
|
|
|||
|
32 Annual Report on Form 10-K
|
|
Horace Mann Educators Corporation
|
|
|
|
Dec. 2014
|
|
Dec. 2015
|
|
Dec. 2016
|
|
Dec. 2017
|
|
Dec. 2018
|
|
Dec. 2019
|
||||||||||||
|
HMEC
|
|
$
|
100
|
|
|
$
|
103
|
|
|
$
|
137
|
|
|
$
|
145
|
|
|
$
|
126
|
|
|
$
|
151
|
|
|
S&P 500 Insurance Index
|
|
100
|
|
|
102
|
|
|
120
|
|
|
140
|
|
|
124
|
|
|
161
|
|
||||||
|
S&P 500 Index
|
|
100
|
|
|
101
|
|
|
113
|
|
|
138
|
|
|
132
|
|
|
174
|
|
||||||
|
Horace Mann Educators Corporation
|
|
Annual Report on Form 10-K 33
|
|
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 |
||||
|
Fourth Quarter 2019
|
|
—
|
|
|
—
|
|
|
—
|
|
|
$22.8 million
|
|
|
|
|
|
|
|
|
|
|
|
||||
|
Third Quarter 2019
|
|
—
|
|
|
—
|
|
|
—
|
|
|
$22.8 million
|
|
|
|
|
|
|
|
|
|
|
|
||||
|
Second Quarter 2019
|
|
—
|
|
|
—
|
|
|
—
|
|
|
$22.8 million
|
|
|
|
|
|
|
|
|
|
|
|
||||
|
First Quarter 2019
|
|
—
|
|
|
—
|
|
|
—
|
|
|
$22.8 million
|
|
|
|
|
|
|
|
|
|
|
|
||||
|
Fourth Quarter 2018
|
|
126,951
|
|
|
$
|
39.41
|
|
|
126,951
|
|
|
$22.8 million
|
|
|
|
|
|
|
|
|
|
|
||||
|
Third Quarter 2018
|
|
—
|
|
|
—
|
|
|
—
|
|
|
$27.8 million
|
|
|
|
|
|
|
|
|
|
|
|
||||
|
Second Quarter 2018
|
|
2,000
|
|
|
39.72
|
|
|
2,000
|
|
|
$27.8 million
|
|
|
|
|
|
|
|
|
|
|
|
||||
|
First Quarter 2018
|
|
161
|
|
|
37.52
|
|
|
161
|
|
|
$27.8 million
|
|
|
34 Annual Report on Form 10-K
|
|
Horace Mann Educators Corporation
|
|
($ in millions, except per share data)
|
|
Year Ended December 31,
|
||||||||||||||||||
|
|
|
2019
|
|
2018
|
|
2017
|
|
2016
|
|
2015
|
||||||||||
|
Consolidated Statement of Operations Data:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
|
Insurance premiums and contract charges earned
|
|
$
|
898.0
|
|
|
$
|
817.3
|
|
|
$
|
794.7
|
|
|
$
|
759.1
|
|
|
$
|
731.9
|
|
|
Net investment income
|
|
365.1
|
|
|
376.5
|
|
|
373.6
|
|
|
361.2
|
|
|
332.6
|
|
|||||
|
Net investment gains (losses)
|
|
153.3
|
|
|
(12.5
|
)
|
|
(3.4
|
)
|
|
4.1
|
|
|
12.7
|
|
|||||
|
Other income
|
|
14.1
|
|
|
10.3
|
|
|
6.6
|
|
|
4.5
|
|
|
3.2
|
|
|||||
|
Total revenues
|
|
1,430.5
|
|
|
1,191.6
|
|
|
1,171.5
|
|
|
1,128.9
|
|
|
1,080.4
|
|
|||||
|
Interest expense
|
|
15.6
|
|
|
13.0
|
|
|
11.9
|
|
|
11.8
|
|
|
13.1
|
|
|||||
|
Income before income taxes
|
|
236.4
|
|
|
19.5
|
|
|
88.7
|
|
|
114.2
|
|
|
129.5
|
|
|||||
|
Net income (1)
|
|
184.4
|
|
|
18.3
|
|
|
169.4
|
|
|
83.8
|
|
|
93.5
|
|
|||||
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
|
Per Share Data: (2)
|
|
|
|
|
|
|
|
|
|
|
||||||||||
|
Net income per share
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
|
Basic
|
|
$
|
4.42
|
|
|
$
|
0.44
|
|
|
$
|
4.10
|
|
|
$
|
2.04
|
|
|
$
|
2.23
|
|
|
Diluted
|
|
4.40
|
|
|
0.44
|
|
|
4.08
|
|
|
2.02
|
|
|
2.20
|
|
|||||
|
Shares of Common Stock (in millions)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
|
Weighted average - basic
|
|
41.7
|
|
|
41.6
|
|
|
41.4
|
|
|
41.2
|
|
|
41.9
|
|
|||||
|
Weighted average - diluted
|
|
41.9
|
|
|
41.9
|
|
|
41.6
|
|
|
41.5
|
|
|
42.4
|
|
|||||
|
Ending outstanding
|
|
41.2
|
|
|
41.0
|
|
|
40.7
|
|
|
40.2
|
|
|
40.6
|
|
|||||
|
Cash dividends per share
|
|
$
|
1.15
|
|
|
$
|
1.14
|
|
|
$
|
1.10
|
|
|
$
|
1.06
|
|
|
$
|
1.00
|
|
|
Book value per share
|
|
38.01
|
|
|
31.50
|
|
|
36.88
|
|
|
32.15
|
|
|
31.18
|
|
|||||
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
|
Balance Sheet Data, at Year End:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
|
Total investments
|
|
$
|
6,639.2
|
|
|
$
|
8,250.7
|
|
|
$
|
8,352.3
|
|
|
$
|
7,999.3
|
|
|
$
|
7,648.0
|
|
|
Total assets
|
|
12,478.7
|
|
|
11,031.9
|
|
|
11,198.3
|
|
|
10,576.8
|
|
|
10,057.0
|
|
|||||
|
Total policy liabilities
|
|
6,956.5
|
|
|
6,384.1
|
|
|
6,182.0
|
|
|
6,024.1
|
|
|
5,683.4
|
|
|||||
|
Short-term debt
|
|
135.0
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||
|
Long-term debt
|
|
298.0
|
|
|
297.7
|
|
|
297.5
|
|
|
247.2
|
|
|
247.0
|
|
|||||
|
Total shareholders' equity
|
|
1,567.3
|
|
|
1,290.6
|
|
|
1,501.6
|
|
|
1,294.0
|
|
|
1,264.7
|
|
|||||
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
|
Segment Information: (3)
|
|
|
|
|
|
|
|
|
|
|
||||||||||
|
Insurance premiums written and contract deposits
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
|
Property and Casualty
|
|
$
|
683.1
|
|
|
$
|
681.5
|
|
|
$
|
662.8
|
|
|
$
|
634.3
|
|
|
$
|
605.8
|
|
|
Supplemental
|
|
65.7
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||
|
Retirement
|
|
462.5
|
|
|
439.1
|
|
|
453.1
|
|
|
520.2
|
|
|
548.0
|
|
|||||
|
Life
|
|
113.2
|
|
|
114.4
|
|
|
111.2
|
|
|
108.0
|
|
|
102.7
|
|
|||||
|
Total
|
|
1,324.5
|
|
|
1,235.0
|
|
|
1,227.1
|
|
|
1,262.5
|
|
|
1,256.5
|
|
|||||
|
Net income (loss)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
|
Property and Casualty
|
|
$
|
54.3
|
|
|
$
|
(14.3
|
)
|
|
$
|
17.8
|
|
|
$
|
25.6
|
|
|
$
|
40.0
|
|
|
Supplemental
|
|
18.0
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||
|
Retirement
|
|
(4.8
|
)
|
|
41.7
|
|
|
88.4
|
|
|
50.7
|
|
|
43.4
|
|
|||||
|
Life
|
|
17.6
|
|
|
18.8
|
|
|
77.6
|
|
|
16.6
|
|
|
15.0
|
|
|||||
|
Corporate and Other (4)
|
|
99.3
|
|
|
(27.9
|
)
|
|
(14.4
|
)
|
|
(9.1
|
)
|
|
(4.9
|
)
|
|||||
|
Total
|
|
184.4
|
|
|
18.3
|
|
|
169.4
|
|
|
83.8
|
|
|
93.5
|
|
|||||
|
(1)
|
Net income in 2019 reflects an after tax realized investment gain of $106.9 million associated with an annuity reinsurance transaction. 2018 reflects after tax impacts of $90.1 million from catastrophes. 2017 reflects a one-time income tax benefit of $99.0 million from TCJA.
|
|
(2)
|
Basic earnings per share is computed based on the weighted average number of shares outstanding plus the weighted average number of fully vested restricted common stock units and common stock units payable as shares of HMEC common stock. Diluted earnings per share is computed based on the weighted average number of shares and common stock equivalents outstanding, to the extent dilutive. The Company's common stock equivalents relate to outstanding common stock options, common stock units (related to deferred compensation for Directors and employees) and restricted common stock units.
|
|
(3)
|
Information regarding assets by segment at December 31, 2019, 2018 and 2017 is contained in Part II - Item 8, Note 18 of the Consolidated Financial Statements in this report.
|
|
(4)
|
The Corporate and Other segment primarily includes interest expense on debt, the impact of net investment gains (losses), corporate debt retirement costs, and certain public company expenses.
|
|
Horace Mann Educators Corporation
|
|
Annual Report on Form 10-K 35
|
|
36 Annual Report on Form 10-K
|
|
Horace Mann Educators Corporation
|
|
($ in millions)
|
|
Year Ended December 31,
|
|
2019-2018
|
|
2018-2017
|
||||||||||||||
|
|
|
2019
|
|
2018
|
|
2017
|
|
$ Change
|
|
$ Change
|
||||||||||
|
Total revenues
|
|
$
|
1,430.5
|
|
|
$
|
1,191.6
|
|
|
$
|
1,171.5
|
|
|
$
|
238.9
|
|
|
$
|
20.1
|
|
|
Net income
|
|
184.4
|
|
|
18.3
|
|
|
169.4
|
|
|
166.1
|
|
|
(151.1
|
)
|
|||||
|
Per diluted share:
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||
|
Net income
|
|
4.40
|
|
|
0.44
|
|
|
4.08
|
|
|
3.96
|
|
|
(3.64
|
)
|
|||||
|
Net investment gains (losses), after tax
|
|
2.87
|
|
|
(0.24
|
)
|
|
(0.04
|
)
|
|
3.11
|
|
|
(0.20
|
)
|
|||||
|
Book value per share
|
|
38.01
|
|
|
31.50
|
|
|
36.88
|
|
|
6.51
|
|
|
(5.38
|
)
|
|||||
|
Net income return on equity - last twelve months
|
|
12.5
|
%
|
|
1.3
|
%
|
|
12.3
|
%
|
|
11.2
|
pts
|
|
-11.0
|
pts
|
|||||
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
|
Net income (loss) by segment:
|
|
|
|
|
|
|
|
|
|
|
||||||||||
|
Property and Casualty
|
|
$
|
54.3
|
|
|
$
|
(14.3
|
)
|
|
$
|
17.8
|
|
|
$
|
68.6
|
|
|
$
|
(32.1
|
)
|
|
Supplemental
|
|
18.0
|
|
|
—
|
|
|
—
|
|
|
N/A
|
|
|
N/A
|
|
|||||
|
Retirement
|
|
(4.8
|
)
|
|
41.7
|
|
|
88.4
|
|
|
(46.5
|
)
|
|
(46.7
|
)
|
|||||
|
Life
|
|
17.6
|
|
|
18.8
|
|
|
77.6
|
|
|
(1.2
|
)
|
|
(58.8
|
)
|
|||||
|
Corporate and Other
|
|
99.3
|
|
|
(27.9
|
)
|
|
(14.4
|
)
|
|
127.2
|
|
|
(13.5
|
)
|
|||||
|
Net income
|
|
$
|
184.4
|
|
|
$
|
18.3
|
|
|
$
|
169.4
|
|
|
$
|
166.1
|
|
|
$
|
(151.1
|
)
|
|
Horace Mann Educators Corporation
|
|
Annual Report on Form 10-K 37
|
|
($ in millions)
|
|
Year Ended December 31,
|
|
2019-2018
|
|
2018-2017
|
||||||||||||
|
|
|
2019
|
|
2018
|
|
2017
|
|
Change %
|
|
Change %
|
||||||||
|
Insurance premiums and contract charges earned
|
|
$
|
898.0
|
|
|
$
|
817.3
|
|
|
$
|
794.7
|
|
|
9.9
|
%
|
|
2.8
|
%
|
|
Net investment income
|
|
365.1
|
|
|
376.5
|
|
|
373.6
|
|
|
-3.0
|
%
|
|
0.8
|
%
|
|||
|
Net investment gains (losses)
|
|
153.3
|
|
|
(12.5
|
)
|
|
(3.4
|
)
|
|
N.M.
|
|
|
N.M.
|
|
|||
|
Other income
|
|
14.1
|
|
|
10.3
|
|
|
6.6
|
|
|
36.9
|
%
|
|
56.1
|
%
|
|||
|
Total revenues
|
|
1,430.5
|
|
|
1,191.6
|
|
|
1,171.5
|
|
|
20.0
|
%
|
|
1.7
|
%
|
|||
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
|
Benefits, claims and settlement expenses
|
|
585.1
|
|
|
637.6
|
|
|
582.3
|
|
|
-8.2
|
%
|
|
9.5
|
%
|
|||
|
Interest credited
|
|
212.8
|
|
|
206.2
|
|
|
198.6
|
|
|
3.2
|
%
|
|
3.8
|
%
|
|||
|
Operating expenses
|
|
234.6
|
|
|
205.4
|
|
|
187.8
|
|
|
14.2
|
%
|
|
9.4
|
%
|
|||
|
DAC unlocking and amortization expense
|
|
109.2
|
|
|
109.9
|
|
|
102.2
|
|
|
-0.6
|
%
|
|
7.5
|
%
|
|||
|
Intangible asset amortization expense
|
|
8.8
|
|
|
—
|
|
|
—
|
|
|
N.M.
|
|
|
N.M.
|
|
|||
|
Interest expense
|
|
15.6
|
|
|
13.0
|
|
|
11.9
|
|
|
20.0
|
%
|
|
9.2
|
%
|
|||
|
Other expense - goodwill impairment
|
|
28.0
|
|
|
—
|
|
|
—
|
|
|
N.M.
|
|
|
N.M.
|
|
|||
|
Total benefits, losses and expenses
|
|
1,194.1
|
|
|
1,172.1
|
|
|
1,082.8
|
|
|
1.9
|
%
|
|
8.2
|
%
|
|||
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
|
Income before income taxes
|
|
236.4
|
|
|
19.5
|
|
|
88.7
|
|
|
N.M.
|
|
|
-78.0
|
%
|
|||
|
Income tax expense (benefit)
|
|
52.0
|
|
|
1.2
|
|
|
(80.7
|
)
|
|
N.M.
|
|
|
-101.5
|
%
|
|||
|
Net income
|
|
$
|
184.4
|
|
|
$
|
18.3
|
|
|
$
|
169.4
|
|
|
N.M.
|
|
|
-89.2
|
%
|
|
|
|
2019
|
|
2018
|
|
2017
|
|
Pretax yield
|
|
4.8%
|
|
5.1%
|
|
5.2%
|
|
After tax yield
|
|
3.8%
|
|
4.1%
|
|
3.4%
|
|
38 Annual Report on Form 10-K
|
|
Horace Mann Educators Corporation
|
|
($ in millions)
|
|
Year Ended December 31,
|
||||||||||
|
|
|
2019
|
|
2018
|
|
2017
|
||||||
|
Other-than-temporary impairments (OTTI) losses recognized in earnings
|
|
$
|
(1.4
|
)
|
|
$
|
(1.5
|
)
|
|
$
|
(12.6
|
)
|
|
Sales and other, net
|
|
151.5
|
|
|
3.5
|
|
|
7.7
|
|
|||
|
Change in fair value - equity securities
|
|
7.3
|
|
|
(18.3
|
)
|
|
N/A
|
|
|||
|
Change in fair value and gains (losses) realized
on settlements - derivatives |
|
(4.1
|
)
|
|
3.8
|
|
|
1.5
|
|
|||
|
Net investment gains (losses)
|
|
$
|
153.3
|
|
|
$
|
(12.5
|
)
|
|
$
|
(3.4
|
)
|
|
Horace Mann Educators Corporation
|
|
Annual Report on Form 10-K 39
|
|
40 Annual Report on Form 10-K
|
|
Horace Mann Educators Corporation
|
|
•
|
Valuation of hard-to-value fixed maturity securities, including evaluation of other-than-temporary impairments
|
|
•
|
Evaluation of goodwill and intangible assets for impairment
|
|
•
|
Valuation of supplemental, annuity and life deferred policy acquisition costs
|
|
•
|
Valuation of liabilities for property and casualty unpaid claims and claim expenses
|
|
•
|
Valuation of certain investment contracts and policy reserves
|
|
•
|
Valuation of assets acquired and liabilities assumed under purchase accounting
|
|
Horace Mann Educators Corporation
|
|
Annual Report on Form 10-K 41
|
|
42 Annual Report on Form 10-K
|
|
Horace Mann Educators Corporation
|
|
Horace Mann Educators Corporation
|
|
Annual Report on Form 10-K 43
|
|
44 Annual Report on Form 10-K
|
|
Horace Mann Educators Corporation
|
|
Horace Mann Educators Corporation
|
|
Annual Report on Form 10-K 45
|
|
($ in millions)
|
|
December 31, 2019
|
|
December 31, 2018
|
||||||||||||||||||||
|
|
|
Case
Reserves
|
|
IBNR
Reserves
|
|
Total (1)
|
|
Case
Reserves
|
|
IBNR
Reserves
|
|
Total (1)
|
||||||||||||
|
Automobile liability
|
|
$
|
97.9
|
|
|
$
|
219.2
|
|
|
$
|
317.1
|
|
|
$
|
103.5
|
|
|
$
|
171.7
|
|
|
$
|
275.2
|
|
|
Automobile other
|
|
12.3
|
|
|
(5.4
|
)
|
|
6.9
|
|
|
12.4
|
|
|
(4.0
|
)
|
|
8.4
|
|
||||||
|
Property
|
|
12.8
|
|
|
39.5
|
|
|
52.3
|
|
|
24.3
|
|
|
48.2
|
|
|
72.5
|
|
||||||
|
All other
|
|
2.3
|
|
|
8.4
|
|
|
10.7
|
|
|
2.1
|
|
|
9.0
|
|
|
11.1
|
|
||||||
|
Total
|
|
$
|
125.3
|
|
|
$
|
261.7
|
|
|
$
|
387.0
|
|
|
$
|
142.3
|
|
|
$
|
224.9
|
|
|
$
|
367.2
|
|
|
(1)
|
These amounts are gross, before reduction for ceded reinsurance reserves.
|
|
46 Annual Report on Form 10-K
|
|
Horace Mann Educators Corporation
|
|
Horace Mann Educators Corporation
|
|
Annual Report on Form 10-K 47
|
|
•
|
Property and Casualty
|
|
•
|
Supplemental
|
|
•
|
Retirement
|
|
•
|
Life
|
|
•
|
Corporate and Other
|
|
•
|
12.8 points of improvement in the Property and Casualty combined ratio for the year due to lower catastrophe losses
|
|
•
|
favorable prior years' reserve development
|
|
•
|
improved automobile underwriting results
|
|
48 Annual Report on Form 10-K
|
|
Horace Mann Educators Corporation
|
|
($ in millions, unless otherwise indicated)
|
|
Year Ended December 31,
|
|
2019-2018
|
|
2018-2017
|
||||||||||||
|
|
|
2019
|
|
2018
|
|
2017
|
|
Change %
|
|
Change %
|
||||||||
|
Financial Data:
|
|
|
|
|
|
|
|
|
|
|
||||||||
|
Premiums written*:
|
|
|
|
|
|
|
|
|
|
|
||||||||
|
Automobile
|
|
$
|
461.7
|
|
|
$
|
469.9
|
|
|
$
|
450.7
|
|
|
-1.7
|
%
|
|
4.3
|
%
|
|
Property and other
|
|
221.4
|
|
|
211.6
|
|
|
212.1
|
|
|
4.6
|
%
|
|
-0.2
|
%
|
|||
|
Total premiums written
|
|
683.1
|
|
|
681.5
|
|
|
662.8
|
|
|
0.2
|
%
|
|
2.8
|
%
|
|||
|
Change in unearned insurance premiums
|
|
(0.4
|
)
|
|
15.8
|
|
|
14.5
|
|
|
-102.5
|
%
|
|
9.0
|
%
|
|||
|
Total insurance premiums earned
|
|
683.5
|
|
|
665.7
|
|
|
648.3
|
|
|
2.7
|
%
|
|
2.7
|
%
|
|||
|
Incurred claims and claims expenses:
|
|
|
|
|
|
|
|
|
|
|
||||||||
|
Claims occurring in the current year
|
|
483.1
|
|
|
548.0
|
|
|
499.0
|
|
|
-11.8
|
%
|
|
9.8
|
%
|
|||
|
Prior years' reserve development
|
|
(7.5
|
)
|
|
(0.3
|
)
|
|
(2.7
|
)
|
|
N.M.
|
|
|
-88.9
|
%
|
|||
|
Total claims and claim expenses incurred
|
|
475.6
|
|
|
547.7
|
|
|
496.3
|
|
|
-13.2
|
%
|
|
10.4
|
%
|
|||
|
Operating expenses, including DAC amortization
|
|
183.6
|
|
|
179.8
|
|
|
173.4
|
|
|
2.1
|
%
|
|
3.7
|
%
|
|||
|
Underwriting gain (loss)
|
|
24.3
|
|
|
(61.8
|
)
|
|
(21.4
|
)
|
|
-139.3
|
%
|
|
N.M.
|
|
|||
|
Net investment income
|
|
41.7
|
|
|
40.1
|
|
|
36.2
|
|
|
4.0
|
%
|
|
10.8
|
%
|
|||
|
Income (loss) before income taxes
|
|
66.7
|
|
|
(20.9
|
)
|
|
14.5
|
|
|
N.M.
|
|
|
N.M.
|
|
|||
|
Net income (loss)
|
|
54.3
|
|
|
(14.3
|
)
|
|
17.8
|
|
|
N.M.
|
|
|
N.M.
|
|
|||
|
Core earnings (loss)*
|
|
54.3
|
|
|
(14.3
|
)
|
|
17.2
|
|
|
N.M.
|
|
|
N.M.
|
|
|||
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
|
Operating Statistics:
|
|
|
|
|
|
|
|
|
|
|
||||||||
|
Total Property and Casualty
|
|
|
|
|
|
|
|
|
|
|
||||||||
|
Loss and loss adjustment expense ratio
|
|
69.6
|
%
|
|
82.3
|
%
|
|
76.6
|
%
|
|
-12.7
|
pts
|
|
5.7
|
pts
|
|||
|
Expense ratio
|
|
26.9
|
%
|
|
27.0
|
%
|
|
26.7
|
%
|
|
-0.1
|
pts
|
|
0.3
|
pts
|
|||
|
Combined ratio:
|
|
96.5
|
%
|
|
109.3
|
%
|
|
103.3
|
%
|
|
-12.8
|
pts
|
|
6.0
|
pts
|
|||
|
Prior years' reserve development
|
|
-1.1
|
%
|
|
—
|
%
|
|
-0.4
|
%
|
|
-1.1
|
pts
|
|
0.4
|
pts
|
|||
|
Catastrophes
|
|
7.6
|
%
|
|
17.1
|
%
|
|
9.5
|
%
|
|
-9.5
|
pts
|
|
7.6
|
pts
|
|||
|
Underlying combined ratio*
|
|
90.0
|
%
|
|
92.2
|
%
|
|
94.2
|
%
|
|
-2.2
|
pts
|
|
-2.0
|
pts
|
|||
|
Automobile
|
|
|
|
|
|
|
|
|
|
|
||||||||
|
Loss and loss adjustment expense ratio
|
|
70.6
|
%
|
|
76.3
|
%
|
|
79.4
|
%
|
|
-5.7
|
pts
|
|
-3.1
|
pts
|
|||
|
Expense ratio
|
|
27.0
|
%
|
|
26.8
|
%
|
|
26.9
|
%
|
|
0.2
|
pts
|
|
-0.1
|
pts
|
|||
|
Combined ratio:
|
|
97.6
|
%
|
|
103.1
|
%
|
|
106.3
|
%
|
|
-5.5
|
pts
|
|
-3.2
|
pts
|
|||
|
Prior years' reserve development
|
|
-1.2
|
%
|
|
—
|
%
|
|
-0.1
|
%
|
|
-1.2
|
pts
|
|
0.1
|
pts
|
|||
|
Catastrophes
|
|
1.2
|
%
|
|
1.7
|
%
|
|
2.3
|
%
|
|
-0.5
|
pts
|
|
-0.6
|
pts
|
|||
|
Underlying combined ratio*
|
|
97.6
|
%
|
|
101.4
|
%
|
|
104.1
|
%
|
|
-3.8
|
pts
|
|
-2.7
|
pts
|
|||
|
Property
|
|
|
|
|
|
|
|
|
|
|
||||||||
|
Loss and loss adjustment expense ratio
|
|
67.4
|
%
|
|
95.4
|
%
|
|
70.5
|
%
|
|
-28.0
|
pts
|
|
24.9
|
pts
|
|||
|
Expense ratio
|
|
26.8
|
%
|
|
27.7
|
%
|
|
26.5
|
%
|
|
-0.9
|
pts
|
|
1.2
|
pts
|
|||
|
Combined ratio:
|
|
94.2
|
%
|
|
123.1
|
%
|
|
97.0
|
%
|
|
-28.9
|
pts
|
|
26.1
|
pts
|
|||
|
Prior years' reserve development
|
|
-0.9
|
%
|
|
-0.1
|
%
|
|
-1.2
|
%
|
|
-0.8
|
pts
|
|
1.1
|
pts
|
|||
|
Catastrophes
|
|
21.1
|
%
|
|
50.2
|
%
|
|
24.5
|
%
|
|
-29.1
|
pts
|
|
25.7
|
pts
|
|||
|
Underlying combined ratio*
|
|
74.0
|
%
|
|
73.0
|
%
|
|
73.7
|
%
|
|
1.0
|
pts
|
|
-0.7
|
pts
|
|||
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
|
Policies in force (in thousands)
|
|
|
|
|
|
|
|
|
|
|
||||||||
|
Automobile
|
|
433
|
|
|
463
|
|
|
479
|
|
|
-6.5
|
%
|
|
-3.3
|
%
|
|||
|
Property
|
|
194
|
|
|
201
|
|
|
205
|
|
|
-3.5
|
%
|
|
-2.0
|
%
|
|||
|
Total
|
|
627
|
|
|
664
|
|
|
684
|
|
|
-5.6
|
%
|
|
-2.9
|
%
|
|||
|
Horace Mann Educators Corporation
|
|
Annual Report on Form 10-K 49
|
|
($ in millions)
|
|
Year Ended December 31,
|
||||||||||
|
|
|
2019
|
|
2018
|
|
2017
|
||||||
|
Three months ended in 2019
|
|
|
|
|
|
|
||||||
|
March 31
|
|
$
|
10.8
|
|
|
$
|
9.8
|
|
|
$
|
17.2
|
|
|
June 30
|
|
22.1
|
|
|
26.8
|
|
|
32.4
|
|
|||
|
September 30
|
|
14.7
|
|
|
32.2
|
|
|
8.6
|
|
|||
|
December 31
|
|
4.4
|
|
|
45.3
|
|
|
3.6
|
|
|||
|
Total full year
|
|
$
|
52.0
|
|
|
$
|
114.1
|
|
|
$
|
61.8
|
|
|
50 Annual Report on Form 10-K
|
|
Horace Mann Educators Corporation
|
|
($ in millions, unless otherwise indicated)
|
|
Year Ended December 31,
|
|
2019-2018
|
|
2018-2017
|
||||||
|
|
|
2019
|
|
2018
|
|
2017
|
|
Change %
|
|
Change %
|
||
|
Financial Data:
|
|
|
|
|
|
|
|
|
|
|
||
|
Insurance premiums and contract deposits
|
|
$
|
65.7
|
|
|
N/A
|
|
N/A
|
|
N/A
|
|
N/A
|
|
Insurance premiums and contract charges
earned
|
|
65.8
|
|
|
N/A
|
|
N/A
|
|
N/A
|
|
N/A
|
|
|
Net investment income
|
|
7.5
|
|
|
N/A
|
|
N/A
|
|
N/A
|
|
N/A
|
|
|
Benefits and settlement expenses
|
|
21.7
|
|
|
N/A
|
|
N/A
|
|
N/A
|
|
N/A
|
|
|
Operating expenses (includes DAC unlocking
and amortization expense)
|
|
20.4
|
|
|
N/A
|
|
N/A
|
|
N/A
|
|
N/A
|
|
|
Intangible asset amortization expense
|
|
6.6
|
|
|
N/A
|
|
N/A
|
|
N/A
|
|
N/A
|
|
|
Income before income taxes
|
|
23.0
|
|
|
N/A
|
|
N/A
|
|
N/A
|
|
N/A
|
|
|
Net income
|
|
18.0
|
|
|
N/A
|
|
N/A
|
|
N/A
|
|
N/A
|
|
|
Core earnings*
|
|
18.0
|
|
|
N/A
|
|
N/A
|
|
N/A
|
|
N/A
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||
|
Operating Statistics:
|
|
|
|
|
|
|
|
|
|
|
||
|
Supplemental insurance in force (thousands)
|
|
297
|
|
|
N/A
|
|
N/A
|
|
N/A
|
|
N/A
|
|
|
Benefits ratio (1)
|
|
37.5
|
%
|
|
N/A
|
|
N/A
|
|
N/A
|
|
N/A
|
|
|
Expense ratio (2)
|
|
27.3
|
%
|
|
N/A
|
|
N/A
|
|
N/A
|
|
N/A
|
|
|
Pretax profit margin (2)
|
|
30.8
|
%
|
|
N/A
|
|
N/A
|
|
N/A
|
|
N/A
|
|
|
Persistency
|
|
89.3
|
%
|
|
N/A
|
|
N/A
|
|
N/A
|
|
N/A
|
|
|
Horace Mann Educators Corporation
|
|
Annual Report on Form 10-K 51
|
|
($ in millions, unless otherwise indicated)
|
|
Year Ended December 31,
|
|
2019-2018
|
|
2018-2017
|
||||||||||||
|
|
|
2019
|
|
2018
|
|
2017
|
|
Change %
|
|
Change %
|
||||||||
|
Financial Data:
|
|
|
|
|
|
|
|
|
|
|
||||||||
|
Contract charges earned
|
|
$
|
29.1
|
|
|
$
|
31.2
|
|
|
$
|
28.0
|
|
|
-6.7
|
%
|
|
11.4
|
%
|
|
Net investment income
|
|
174.7
|
|
|
262.6
|
|
|
262.0
|
|
|
-33.5
|
%
|
|
0.2
|
%
|
|||
|
Interest credited
|
|
93.6
|
|
|
161.1
|
|
|
153.5
|
|
|
-41.9
|
%
|
|
5.0
|
%
|
|||
|
Net interest margin without net
investment gains (losses)
|
|
81.1
|
|
|
101.5
|
|
|
108.5
|
|
|
-20.1
|
%
|
|
-6.5
|
%
|
|||
|
Net interest margin - Reinsured block
|
|
3.4
|
|
|
—
|
|
|
—
|
|
|
N.M.
|
|
|
N.M.
|
|
|||
|
Mortality loss and other reserve charges
|
|
5.3
|
|
|
7.6
|
|
|
5.8
|
|
|
-30.3
|
%
|
|
31.0
|
%
|
|||
|
Operating expenses
|
|
60.5
|
|
|
57.3
|
|
|
49.8
|
|
|
5.6
|
%
|
|
15.1
|
%
|
|||
|
DAC and intangible asset amortization expense,
excluding DAC unlocking
|
|
18.0
|
|
|
19.2
|
|
|
16.7
|
|
|
-6.3
|
%
|
|
15.0
|
%
|
|||
|
DAC unlocking
|
|
3.5
|
|
|
3.9
|
|
|
1.1
|
|
|
-10.3
|
%
|
|
N.M.
|
|
|||
|
Other expenses - goodwill impairment
|
|
28.0
|
|
|
—
|
|
|
—
|
|
|
N.M.
|
|
|
N.M.
|
|
|||
|
Income (loss) before income taxes
|
|
(1.8
|
)
|
|
51.7
|
|
|
69.0
|
|
|
-103.5
|
%
|
|
-25.1
|
%
|
|||
|
Net income (loss)
|
|
(4.8
|
)
|
|
41.7
|
|
|
88.4
|
|
|
-111.5
|
%
|
|
-52.8
|
%
|
|||
|
Core earnings*
|
|
23.2
|
|
|
41.7
|
|
|
48.9
|
|
|
-44.4
|
%
|
|
-14.7
|
%
|
|||
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
|
Operating Statistics:
|
|
|
|
|
|
|
|
|
|
|
||||||||
|
Annuity contract deposits*
|
|
|
|
|
|
|
|
|
|
|
||||||||
|
Variable
|
|
$
|
217.3
|
|
|
$
|
205.8
|
|
|
$
|
173.9
|
|
|
5.6
|
%
|
|
18.3
|
%
|
|
Fixed
|
|
245.2
|
|
|
233.3
|
|
|
279.2
|
|
|
5.1
|
%
|
|
-16.4
|
%
|
|||
|
Total
|
|
462.5
|
|
|
439.1
|
|
|
453.1
|
|
|
5.3
|
%
|
|
-3.1
|
%
|
|||
|
Single
|
|
256.6
|
|
|
234.2
|
|
|
244.4
|
|
|
9.6
|
%
|
|
-4.2
|
%
|
|||
|
Recurring
|
|
205.9
|
|
|
204.9
|
|
|
208.7
|
|
|
0.5
|
%
|
|
-1.8
|
%
|
|||
|
Total
|
|
462.5
|
|
|
439.1
|
|
|
453.1
|
|
|
5.3
|
%
|
|
-3.1
|
%
|
|||
|
Assets under administration (AUA)
|
|
|
|
|
|
|
|
|
|
|
||||||||
|
Annuity assets under management (1)
|
|
4,379.6
|
|
|
6,713.3
|
|
|
6,764.0
|
|
|
-34.8
|
%
|
|
-0.7
|
%
|
|||
|
Broker and advisory assets
under administration (2)
|
|
2,391.8
|
|
|
330.3
|
|
|
266.2
|
|
|
N.M.
|
|
|
24.1
|
%
|
|||
|
Recordkeeping assets under administration (2)
|
|
1,499.2
|
|
|
—
|
|
|
—
|
|
|
N.M.
|
|
|
N.M.
|
|
|||
|
Total
|
|
8,270.6
|
|
|
7,043.6
|
|
|
7,030.2
|
|
|
17.4
|
%
|
|
0.2
|
%
|
|||
|
Persistency
|
|
|
|
|
|
|
|
|
|
|
||||||||
|
Variable annuities
|
|
94.7
|
%
|
|
94.4
|
%
|
|
94.8
|
%
|
|
0.3
|
pts
|
|
-0.4
|
pts
|
|||
|
Fixed annuities
|
|
94.0
|
%
|
|
94.0
|
%
|
|
94.5
|
%
|
|
—
|
|
|
-0.5
|
pts
|
|||
|
Total
|
|
94.3
|
%
|
|
94.1
|
%
|
|
94.6
|
%
|
|
0.2
|
pts
|
|
-0.5
|
pts
|
|||
|
Annuity contracts in force (thousands)
|
|
229
|
|
|
226
|
|
|
223
|
|
|
1.3
|
%
|
|
1.3
|
%
|
|||
|
Fixed spread - YTD annualized (basis points)
|
|
194
|
|
|
171
|
|
|
194
|
|
|
23
|
bps
|
|
-23bps
|
|
|||
|
(1)
|
Amount reported as of December 31, 2019 excludes $707.8 million of assets under management held under modified coinsurance reinsurance.
|
|
(2)
|
2019 includes the results of BCG acquired on January 2, 2019.
|
|
52 Annual Report on Form 10-K
|
|
Horace Mann Educators Corporation
|
|
($ in millions)
|
|
December 31, 2019
|
|||||||||||||||
|
|
|
|
|
|
|
Deferred Annuities at
|
|||||||||||
|
|
|
Total Deferred Annuities
|
|
Minimum Guaranteed Rate
|
|||||||||||||
|
|
|
Percent
of Total
|
|
Accumulated
Value (AV)
|
|
Percent of
Total Deferred
Annuities AV
|
|
Percent
of Total
|
|
Accumulated
Value
|
|||||||
|
Minimum guaranteed interest rates:
|
|
|
|
|
|
|
|
|
|
|
|||||||
|
Less than 2%
|
|
53.0
|
%
|
|
$
|
1,261.5
|
|
|
49.5
|
%
|
|
36.8
|
%
|
|
$
|
623.9
|
|
|
Equal to 2% but less than 3%
|
|
12.1
|
|
|
289.1
|
|
|
83.3
|
|
|
14.2
|
|
|
240.9
|
|
||
|
Equal to 3% but less than 4%
|
|
25.6
|
|
|
610.5
|
|
|
99.9
|
|
|
36.0
|
|
|
610.1
|
|
||
|
Equal to 4% but less than 5%
|
|
7.2
|
|
|
170.6
|
|
|
100.0
|
|
|
10.0
|
|
|
170.6
|
|
||
|
5% or higher
|
|
2.1
|
|
|
50.9
|
|
|
100.0
|
|
|
3.0
|
|
|
50.9
|
|
||
|
Total
|
|
100.0
|
%
|
|
$
|
2,382.6
|
|
|
71.2
|
%
|
|
100.0
|
%
|
|
$
|
1,696.4
|
|
|
Horace Mann Educators Corporation
|
|
Annual Report on Form 10-K 53
|
|
($ in millions, unless otherwise indicated)
|
|
Year Ended December 31,
|
|
2019-2018
|
|
2018-2017
|
||||||||||||
|
|
|
2019
|
|
2018
|
|
2017
|
|
Change %
|
|
Change %
|
||||||||
|
Financial Data:
|
|
|
|
|
|
|
|
|
|
|
||||||||
|
Insurance premiums and contract deposits*
|
|
$
|
113.2
|
|
|
$
|
114.4
|
|
|
$
|
111.2
|
|
|
-1.0
|
%
|
|
2.9
|
%
|
|
Insurance premiums and contract charges earned
|
|
119.6
|
|
|
120.4
|
|
|
118.4
|
|
|
-0.7
|
%
|
|
1.7
|
%
|
|||
|
Net investment income
|
|
72.0
|
|
|
74.4
|
|
|
76.2
|
|
|
-3.2
|
%
|
|
-2.4
|
%
|
|||
|
Benefits and settlement expenses
|
|
79.5
|
|
|
82.3
|
|
|
80.2
|
|
|
-3.4
|
%
|
|
2.6
|
%
|
|||
|
Interest credited
|
|
45.0
|
|
|
45.1
|
|
|
45.1
|
|
|
-0.2
|
%
|
|
—
|
%
|
|||
|
DAC amortization expense, excluding unlocking
|
|
8.1
|
|
|
7.3
|
|
|
7.7
|
|
|
11.0
|
%
|
|
-5.2
|
%
|
|||
|
DAC unlocking
|
|
(0.3
|
)
|
|
0.3
|
|
|
(0.2
|
)
|
|
N.M.
|
|
|
N.M.
|
|
|||
|
Operating expenses
|
|
37.9
|
|
|
36.4
|
|
|
36.5
|
|
|
4.1
|
%
|
|
-0.3
|
%
|
|||
|
Income before income taxes
|
|
21.8
|
|
|
23.7
|
|
|
25.7
|
|
|
-8.0
|
%
|
|
-7.8
|
%
|
|||
|
Net income
|
|
17.6
|
|
|
18.8
|
|
|
77.6
|
|
|
-6.4
|
%
|
|
-75.8
|
%
|
|||
|
Core earnings*
|
|
17.6
|
|
|
18.8
|
|
|
17.3
|
|
|
-6.4
|
%
|
|
8.7
|
%
|
|||
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
|
Operating Statistics:
|
|
|
|
|
|
|
|
|
|
|
||||||||
|
Life insurance in force
|
|
$
|
19,180
|
|
|
$
|
18,278
|
|
|
$
|
17,564
|
|
|
4.9
|
%
|
|
4.1
|
%
|
|
Number of policies in force* (in thousands)
|
|
201
|
|
|
199
|
|
|
198
|
|
|
1.0
|
%
|
|
0.5
|
%
|
|||
|
Average face amount in force (in dollars)
|
|
$
|
95,488
|
|
|
$
|
92,073
|
|
|
$
|
88,758
|
|
|
3.7
|
%
|
|
3.7
|
%
|
|
Lapse ratio (ordinary life insurance in force)
|
|
4.6
|
%
|
|
4.6
|
%
|
|
4.9
|
%
|
|
—
|
|
|
-0.3
|
pts
|
|||
|
Mortality costs
|
|
$
|
33.5
|
|
|
$
|
35.1
|
|
|
$
|
36.1
|
|
|
-4.6
|
%
|
|
-2.8
|
%
|
|
54 Annual Report on Form 10-K
|
|
Horace Mann Educators Corporation
|
|
($ in millions)
|
|
Year Ended December 31,
|
|
2019-2018
|
|
2018-2017
|
||||||||||||
|
|
|
2019
|
|
2018
|
|
2017
|
|
Change %
|
|
Change %
|
||||||||
|
Interest expense
|
|
$
|
14.3
|
|
|
$
|
11.9
|
|
|
$
|
11.8
|
|
|
20.2
|
%
|
|
0.8
|
%
|
|
Net investment gains (losses) pretax
|
|
153.3
|
|
|
(12.5
|
)
|
|
(3.4
|
)
|
|
N.M.
|
|
|
N.M.
|
|
|||
|
Tax on net investment gains (losses)
|
|
33.1
|
|
|
(2.4
|
)
|
|
(1.7
|
)
|
|
N.M.
|
|
|
41.2
|
%
|
|||
|
Net investment gains (losses) after tax
|
|
120.2
|
|
|
(10.1
|
)
|
|
(1.7
|
)
|
|
N.M.
|
|
|
N.M.
|
|
|||
|
Net income (loss)
|
|
99.3
|
|
|
(27.9
|
)
|
|
(14.4
|
)
|
|
N.M.
|
|
|
-93.8
|
%
|
|||
|
Core earnings (loss)*
|
|
(20.9
|
)
|
|
(17.8
|
)
|
|
(11.3
|
)
|
|
-17.4
|
%
|
|
-57.5
|
%
|
|||
|
($ in millions)
|
|
Year Ended December 31,
|
|
2019-2018
|
|
2018-2017
|
||||||||||||
|
|
|
2019
|
|
2018
|
|
2017
|
|
Change %
|
|
Change %
|
||||||||
|
Net investment income - investment portfolio
|
|
$
|
294.3
|
|
|
$
|
376.5
|
|
|
$
|
373.6
|
|
|
-21.8
|
%
|
|
0.8
|
%
|
|
Investment income - deposit asset on reinsurance
|
|
70.8
|
|
|
—
|
|
|
—
|
|
|
N.M.
|
|
|
N.M.
|
|
|||
|
Total net investment income
|
|
365.1
|
|
|
376.5
|
|
|
373.6
|
|
|
-3.0
|
%
|
|
0.8
|
%
|
|||
|
Pretax net investment gains (losses)
|
|
153.3
|
|
|
(12.5
|
)
|
|
(3.4
|
)
|
|
N.M.
|
|
|
N.M.
|
|
|||
|
Pretax net unrealized investment gains on securities
|
|
334.7
|
|
|
141.4
|
|
|
440.3
|
|
|
136.7
|
%
|
|
-67.9
|
%
|
|||
|
Horace Mann Educators Corporation
|
|
Annual Report on Form 10-K 55
|
|
($ in millions)
|
|
December 31, 2019
|
|||||||||||||
|
|
|
Number of
Issuers
|
|
Fair
Value
|
|
Amortized
Cost or
Cost
|
|
Pretax Net
Unrealized
Gain (Loss)
|
|||||||
|
Fixed maturity securities
|
|
|
|
|
|
|
|
|
|||||||
|
Corporate bonds
|
|
|
|
|
|
|
|
|
|||||||
|
Banking & Finance
|
|
118
|
|
|
$
|
426.5
|
|
|
$
|
397.9
|
|
|
$
|
28.6
|
|
|
Insurance
|
|
44
|
|
|
166.2
|
|
|
149.0
|
|
|
17.2
|
|
|||
|
Energy (1)
|
|
68
|
|
|
121.8
|
|
|
111.7
|
|
|
10.1
|
|
|||
|
Healthcare, Pharmacy
|
|
58
|
|
|
116.4
|
|
|
108.5
|
|
|
7.9
|
|
|||
|
Real Estate
|
|
36
|
|
|
114.4
|
|
|
108.7
|
|
|
5.7
|
|
|||
|
Technology
|
|
30
|
|
|
85.6
|
|
|
80.6
|
|
|
5.0
|
|
|||
|
Transportation
|
|
32
|
|
|
84.8
|
|
|
79.5
|
|
|
5.3
|
|
|||
|
Utilities
|
|
53
|
|
|
76.2
|
|
|
68.0
|
|
|
8.2
|
|
|||
|
Telecommunications
|
|
27
|
|
|
52.9
|
|
|
47.6
|
|
|
5.3
|
|
|||
|
Food and Beverage
|
|
23
|
|
|
46.8
|
|
|
43.8
|
|
|
3.0
|
|
|||
|
All other corporates (2)
|
|
223
|
|
|
289.9
|
|
|
269.2
|
|
|
20.7
|
|
|||
|
Total corporate bonds
|
|
712
|
|
|
1,581.5
|
|
|
1,464.5
|
|
|
117.0
|
|
|||
|
Mortgage-backed securities
|
|
|
|
|
|
|
|
|
|
|
|
|
|||
|
U.S. Government and federally sponsored agencies
|
|
268
|
|
|
497.2
|
|
|
470.2
|
|
|
27.0
|
|
|||
|
Commercial (3)
|
|
130
|
|
|
367.1
|
|
|
352.2
|
|
|
14.9
|
|
|||
|
Other
|
|
45
|
|
|
75.9
|
|
|
76.2
|
|
|
(0.3
|
)
|
|||
|
Municipal bonds (4)
|
|
560
|
|
|
1,686.1
|
|
|
1,545.8
|
|
|
140.3
|
|
|||
|
Government bonds
|
|
|
|
|
|
|
|
|
|
|
|
|
|||
|
U.S.
|
|
36
|
|
|
458.9
|
|
|
436.7
|
|
|
22.2
|
|
|||
|
Foreign
|
|
9
|
|
|
45.4
|
|
|
42.8
|
|
|
2.6
|
|
|||
|
Collateralized loan obligations (5)
|
|
117
|
|
|
619.4
|
|
|
621.6
|
|
|
(2.2
|
)
|
|||
|
Asset-backed securities
|
|
111
|
|
|
460.2
|
|
|
447.0
|
|
|
13.2
|
|
|||
|
Total fixed maturity securities
|
|
1,988
|
|
|
$
|
5,791.7
|
|
|
$
|
5,457.0
|
|
|
$
|
334.7
|
|
|
|
|
|
|
|
|
|
|
|
|||||||
|
Equity securities
|
|
|
|
|
|
|
|
|
|
|
|
|
|||
|
Non-redeemable preferred stocks
|
|
14
|
|
|
$
|
60.4
|
|
|
|
|
|
||||
|
Common stocks
|
|
94
|
|
|
20.1
|
|
|
|
|
|
|||||
|
Closed-end fund
|
|
1
|
|
|
21.4
|
|
|
|
|
|
|||||
|
Total equity securities
|
|
109
|
|
|
$
|
101.9
|
|
|
|
|
|
|
|
||
|
|
|
|
|
|
|
|
|
|
|||||||
|
Total
|
|
2,097
|
|
|
$
|
5,893.6
|
|
|
|
|
|
|
|
||
|
(1)
|
At December 31, 2019, the fair value amount included $9.3 million which were non-investment grade.
|
|
(2)
|
The All Other Corporates category contains 18 additional industry classifications. Broadcasting and media, aerospace and defense, consumer products, metal and mining and retail represented $158.4 million of fair value at December 31, 2019, with the remaining 13 classifications each representing less than $18.0 million.
|
|
(3)
|
At December 31, 2019, 100% were investment grade, with an overall credit rating of AA+, and the positions were well diversified by property type, geography and sponsor.
|
|
(4)
|
Holdings are geographically diversified, 51.4% are tax-exempt and 77.5% are revenue bonds tied to essential services, such as mass transit, water and sewer. The overall credit quality of the municipal bond portfolio was AA- at December 31, 2019.
|
|
(5)
|
Based on fair value, 95.2% of the collateralized loan obligation securities were rated investment grade by Standard & Poor's Global Inc. (S&P), Moody's Investors Service, Inc. (Moody's) and/or Fitch Ratings, Inc. (Fitch) at December 31, 2019.
|
|
56 Annual Report on Form 10-K
|
|
Horace Mann Educators Corporation
|
|
($ in millions)
|
|
December 31, 2019
|
|||||||||
|
|
|
Percent
of Total
Fair
Value
|
|
Fair
Value
|
|
Amortized
Cost or Cost
|
|||||
|
Fixed maturity securities
|
|
|
|
|
|
|
|||||
|
AAA
|
|
11.5
|
%
|
|
$
|
665.1
|
|
|
$
|
654.9
|
|
|
AA (2)
|
|
42.7
|
|
|
2,473.4
|
|
|
2,327.3
|
|
||
|
A
|
|
23.3
|
|
|
1,349.5
|
|
|
1,250.8
|
|
||
|
BBB
|
|
18.9
|
|
|
1,093.3
|
|
|
1,022.7
|
|
||
|
BB
|
|
1.7
|
|
|
98.8
|
|
|
95.1
|
|
||
|
B
|
|
0.4
|
|
|
24.6
|
|
|
23.9
|
|
||
|
CCC or lower
|
|
—
|
|
|
1.6
|
|
|
1.9
|
|
||
|
Not rated (3)
|
|
1.5
|
|
|
85.4
|
|
|
80.4
|
|
||
|
Total fixed maturity securities
|
|
100.0
|
%
|
|
$
|
5,791.7
|
|
|
$
|
5,457.0
|
|
|
Equity securities
|
|
|
|
|
|
|
|||||
|
AAA
|
|
—
|
|
|
—
|
|
|
|
|||
|
AA
|
|
—
|
|
|
—
|
|
|
|
|||
|
A
|
|
—
|
|
|
—
|
|
|
|
|||
|
BBB
|
|
59.3
|
%
|
|
$
|
60.4
|
|
|
|
||
|
BB
|
|
—
|
|
|
—
|
|
|
|
|||
|
B
|
|
—
|
|
|
—
|
|
|
|
|||
|
CCC or lower
|
|
—
|
|
|
—
|
|
|
|
|||
|
Not rated
|
|
40.7
|
|
|
41.5
|
|
|
|
|||
|
Total equity securities
|
|
100.0
|
%
|
|
$
|
101.9
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
|
Total
|
|
|
|
|
$
|
5,893.6
|
|
|
|
|
|
|
(1)
|
Ratings are as assigned primarily by S&P when available, with remaining ratings as assigned on an equivalent basis by Moody's or Fitch. Ratings for publicly traded securities are determined when the securities are acquired and are updated monthly to reflect any changes in ratings.
|
|
(2)
|
At December 31, 2019, the AA rated fair value amount included $458.9 million of U.S. Government and federally sponsored agency securities and $708.4 million of mortgage-backed and asset-backed securities issued by U.S. Government and federally sponsored agencies.
|
|
(3)
|
This category primarily represents private placement and municipal securities not rated by either S&P, Moody's or Fitch.
|
|
Horace Mann Educators Corporation
|
|
Annual Report on Form 10-K 57
|
|
($ in millions)
|
|
Year Ended December 31,
|
|
2019-2018
|
|
2018-2017
|
||||||||||||
|
|
|
2019
|
|
2018
|
|
2017
|
|
Change %
|
|
Change %
|
||||||||
|
Net cash provided by operating activities
|
|
$
|
127.6
|
|
|
$
|
200.9
|
|
|
$
|
256.6
|
|
|
-36.5
|
%
|
|
-21.7
|
%
|
|
Net cash provided by (used in) investing activities
|
|
55.9
|
|
|
(186.5
|
)
|
|
(228.7
|
)
|
|
130.0
|
%
|
|
18.5
|
%
|
|||
|
Net cash used in financing activities
|
|
(169.9
|
)
|
|
(10.1
|
)
|
|
(37.0
|
)
|
|
N.M.
|
|
|
72.7
|
%
|
|||
|
Net increase (decrease) in cash
|
|
13.6
|
|
|
4.3
|
|
|
(9.1
|
)
|
|
N.M.
|
|
|
N.M.
|
|
|||
|
Cash at beginning of period
|
|
11.9
|
|
|
7.6
|
|
|
16.7
|
|
|
56.6
|
%
|
|
-54.5
|
%
|
|||
|
Cash at end of period
|
|
$
|
25.5
|
|
|
$
|
11.9
|
|
|
$
|
7.6
|
|
|
114.3
|
%
|
|
56.6
|
%
|
|
58 Annual Report on Form 10-K
|
|
Horace Mann Educators Corporation
|
|
($ in millions)
|
|
Payments Due By Period as of December 31, 2019
|
||||||||||||||||||
|
|
|
Total
|
|
Less Than
1 Year
(2020)
|
|
1 - 3 Years
(2021 and
2022)
|
|
3 - 5 Years
(2023 and
2024)
|
|
More Than
5 Years
(2025 and
beyond)
|
||||||||||
|
Fixed annuities and fixed option
of variable annuities (1)
|
|
$
|
3,420.3
|
|
|
$
|
159.4
|
|
|
$
|
328.2
|
|
|
$
|
349.3
|
|
|
$
|
2,583.4
|
|
|
Payout annuity contracts (1)(2)
|
|
885.4
|
|
|
154.0
|
|
|
49.5
|
|
|
212.2
|
|
|
469.7
|
|
|||||
|
Supplemental and life insurance policies (1)
|
|
3,710.3
|
|
|
158.1
|
|
|
323.2
|
|
|
328.9
|
|
|
2,900.1
|
|
|||||
|
Property and Casualty claims and claim
adjustment expenses (1)
|
|
266.5
|
|
|
153.0
|
|
|
103.8
|
|
|
9.2
|
|
|
0.5
|
|
|||||
|
Short-term debt obligations,
Bank Credit Facility
(expires June 21, 2024) (3)
|
|
153.5
|
|
|
4.1
|
|
|
8.2
|
|
|
141.2
|
|
|
—
|
|
|||||
|
Long-term debt obligations,
FHLB borrowings due October
and December 2022 (4)
|
|
52.8
|
|
|
1.0
|
|
|
51.8
|
|
|
—
|
|
|
—
|
|
|||||
|
Long-term debt obligations
Senior Notes due December 1, 2025 (3)
|
|
317.6
|
|
|
11.3
|
|
|
22.5
|
|
|
22.5
|
|
|
261.3
|
|
|||||
|
Operating lease obligations (5)
|
|
19.1
|
|
|
4.5
|
|
|
8.4
|
|
|
5.4
|
|
|
0.8
|
|
|||||
|
Total
|
|
$
|
8,825.5
|
|
|
$
|
645.4
|
|
|
$
|
895.6
|
|
|
$
|
1,068.7
|
|
|
$
|
6,215.8
|
|
|
(1)
|
This information represents estimates of both the amounts to be paid to policyholders and the timing of such payments and is net of anticipated reinsurance recoveries.
|
|
(2)
|
Includes $495.0 million obligation to FHLB plus interest.
|
|
(3)
|
Includes principal and interest.
|
|
(4)
|
Includes $50.0 million obligation to FHLB plus interest.
|
|
(5)
|
The Company has entered into various operating lease agreements, primarily for real estate offices.
|
|
Horace Mann Educators Corporation
|
|
Annual Report on Form 10-K 59
|
|
60 Annual Report on Form 10-K
|
|
Horace Mann Educators Corporation
|
|
($ in millions)
|
|
Effective
Interest
Rates
|
|
Final
Maturity
|
|
December 31,
|
||||||
|
|
|
|
|
2019
|
|
2018
|
||||||
|
Short-term debt
|
|
|
|
|
|
|
|
|
||||
|
Bank Credit Facility
|
|
Variable
|
|
2024
|
|
$
|
135.0
|
|
|
$
|
—
|
|
|
Long-term debt (1)
|
|
|
|
|
|
|
|
|
||||
|
4.50% Senior Notes, Aggregate principal amount of
$250,000 less unaccrued discount of $426 and $488 and unamortized debt issuance costs of $1,549 and $1,772 |
|
4.50%
|
|
2025
|
|
248.0
|
|
|
247.7
|
|
||
|
Federal Home Loan Bank borrowing
|
|
1.99%
|
|
2022
|
|
50.0
|
|
|
50.0
|
|
||
|
Total
|
|
|
|
|
|
$
|
433.0
|
|
|
$
|
297.7
|
|
|
Horace Mann Educators Corporation
|
|
Annual Report on Form 10-K 61
|
|
62 Annual Report on Form 10-K
|
|
Horace Mann Educators Corporation
|
|
|
|
Insurance Financial
Strength Ratings (Outlook)
|
|
Debt Ratings (Outlook)
|
|||||
|
S&P
|
|
A
|
|
(stable)
|
|
BBB
|
|
(stable)
|
|
|
Moody's
|
|
A2
|
|
(stable)
|
|
Baa2
|
|
(stable)
|
|
|
A.M. Best
|
|
|
|
|
|
|
|
|
|
|
HMEC (parent company)
|
|
N.A.
|
|
|
|
bbb
|
|
(stable)
|
|
|
HMEC's Life
|
|
A
|
|
(stable)
|
|
N.A.
|
|
|
|
|
HMEC's Property and Casualty subsidiaries
|
|
A
|
|
(stable)
|
|
N.A.
|
|
|
|
|
HMEC's Supplemental subsidiaries
|
|
A-
|
|
(stable)
|
|
N.A.
|
|
|
|
|
Fitch
|
|
A
|
|
(stable)
|
|
BBB
|
|
(stable)
|
|
|
Horace Mann Educators Corporation
|
|
Annual Report on Form 10-K 63
|
|
64 Annual Report on Form 10-K
|
|
Horace Mann Educators Corporation
|
|
Horace Mann Educators Corporation
|
|
Annual Report on Form 10-K 65
|
|
|
|
Page
|
|
|
||
|
|
||
|
|
||
|
|
||
|
|
||
|
|
||
|
|
||
|
|
||
|
|
||
|
|
||
|
|
||
|
|
||
|
|
||
|
|
||
|
|
||
|
|
||
|
|
||
|
|
||
|
|
||
|
|
||
|
|
||
|
|
||
|
|
||
|
|
||
|
|
||
|
|
||
|
66 Annual Report on Form 10-K
|
|
Horace Mann Educators Corporation
|
|
Horace Mann Educators Corporation
|
|
Annual Report on Form 10-K 67
|
|
•
|
Developing an independent range of fair value estimates using information from the Company, market data sources, models, and key assumptions for a selection of securities; and
|
|
•
|
Comparing the Company’s fair value estimates of hard-to-value securities to our independent range of fair value estimates for the same selection of securities.
|
|
•
|
Evaluating the Company’s reserving methods, procedures, key assumptions and judgments by comparing to generally accepted actuarial standards;
|
|
•
|
Developing an independent estimate of the reserves for certain lines of business;
|
|
•
|
Examining the Company’s internal actuarial analyses for certain remaining lines of business;
|
|
•
|
Developing an independent range of reserves based on actuarial methodologies in order to evaluate the Company’s recorded reserves; and
|
|
•
|
Assessing any movement of the Company’s recorded reserves within the range of reserves.
|
|
68 Annual Report on Form 10-K
|
|
Horace Mann Educators Corporation
|
|
•
|
Evaluating the valuation methods, models, and assumptions used to estimate the fair value of the insurance contracts, consisting of VOBA and insurance policy reserves, and VODA, in light of the generally accepted actuarial standards;
|
|
•
|
Performing independent estimates of insurance policy reserves using the Company’s policy data and assumptions for a selection of policies; and
|
|
•
|
Assessing the morbidity and discount rate assumptions in light of NTA’s historical experience as well as industry trends.
|
|
•
|
Comparing the Company’s discount rate, to a discount rate that was independently developed using publicly available market data for comparable entities; and
|
|
•
|
Comparing the estimated fair value of VODA to an independent estimate derived using a multi-period excess earnings method under the income approach based on NTA’s forecasted business production.
|
|
Horace Mann Educators Corporation
|
|
Annual Report on Form 10-K 69
|
|
70 Annual Report on Form 10-K
|
|
Horace Mann Educators Corporation
|
|
|
|
Year Ended December 31,
|
||||||||||
|
|
|
2019
|
|
2018
|
|
2017
|
||||||
|
Revenues
|
|
|
|
|
|
|
|
|
|
|||
|
Insurance premiums and contract charges earned
|
|
$
|
897,954
|
|
|
$
|
817,333
|
|
|
$
|
794,703
|
|
|
Net investment income
|
|
365,064
|
|
|
376,507
|
|
|
373,630
|
|
|||
|
Net investment gains (losses)
|
|
153,340
|
|
|
(12,543
|
)
|
|
(3,406
|
)
|
|||
|
Other income
|
|
14,127
|
|
|
10,302
|
|
|
6,623
|
|
|||
|
|
|
|
|
|
|
|
||||||
|
Total revenues
|
|
1,430,485
|
|
|
1,191,599
|
|
|
1,171,550
|
|
|||
|
|
|
|
|
|
|
|
||||||
|
Benefits, losses and expenses
|
|
|
|
|
|
|
|
|
|
|||
|
Benefits, claims and settlement expenses
|
|
585,068
|
|
|
637,560
|
|
|
582,306
|
|
|||
|
Interest credited
|
|
212,786
|
|
|
206,199
|
|
|
198,635
|
|
|||
|
Operating expenses
|
|
234,609
|
|
|
205,413
|
|
|
187,789
|
|
|||
|
DAC unlocking and amortization expense
|
|
109,181
|
|
|
109,889
|
|
|
102,185
|
|
|||
|
Intangible asset amortization expense
|
|
8,790
|
|
|
—
|
|
|
—
|
|
|||
|
Interest expense
|
|
15,577
|
|
|
13,001
|
|
|
11,948
|
|
|||
|
Other expense - goodwill impairment
|
|
28,025
|
|
|
—
|
|
|
—
|
|
|||
|
|
|
|
|
|
|
|
||||||
|
Total benefits, losses and expenses
|
|
1,194,036
|
|
|
1,172,062
|
|
|
1,082,863
|
|
|||
|
|
|
|
|
|
|
|
||||||
|
Income before income taxes
|
|
236,449
|
|
|
19,537
|
|
|
88,687
|
|
|||
|
Income tax expense (benefit)
|
|
52,006
|
|
|
1,194
|
|
|
(80,772
|
)
|
|||
|
|
|
|
|
|
|
|
||||||
|
Net income
|
|
$
|
184,443
|
|
|
$
|
18,343
|
|
|
$
|
169,459
|
|
|
|
|
|
|
|
|
|
||||||
|
Net income per share
|
|
|
|
|
|
|
|
|
|
|||
|
Basic
|
|
$
|
4.42
|
|
|
$
|
0.44
|
|
|
$
|
4.10
|
|
|
Diluted
|
|
$
|
4.40
|
|
|
$
|
0.44
|
|
|
$
|
4.08
|
|
|
|
|
|
|
|
|
|
||||||
|
Weighted average number of shares and equivalent shares
|
|
|
|
|
|
|
|
|
|
|||
|
Basic
|
|
41,737,876
|
|
|
41,570,492
|
|
|
41,364,546
|
|
|||
|
Diluted
|
|
41,948,531
|
|
|
41,894,232
|
|
|
41,564,979
|
|
|||
|
|
|
|
|
|
|
|
||||||
|
Net investment gains (losses)
|
|
|
|
|
|
|
||||||
|
Total other-than-temporary impairment losses on securities
|
|
$
|
(1,380
|
)
|
|
$
|
(1,530
|
)
|
|
$
|
(12,620
|
)
|
|
Portion of losses recognized in other
comprehensive income (loss)
|
|
—
|
|
|
—
|
|
|
—
|
|
|||
|
Net other-than-temporary impairment losses
on securities recognized in earnings
|
|
(1,380
|
)
|
|
(1,530
|
)
|
|
(12,620
|
)
|
|||
|
Sales and other, net
|
|
151,495
|
|
|
3,491
|
|
|
7,756
|
|
|||
|
Change in fair value - equity securities
|
|
7,308
|
|
|
(18,323
|
)
|
|
—
|
|
|||
|
Change in fair value and gains realized
on settlements - derivatives
|
|
(4,083
|
)
|
|
3,819
|
|
|
1,458
|
|
|||
|
Total
|
|
$
|
153,340
|
|
|
$
|
(12,543
|
)
|
|
$
|
(3,406
|
)
|
|
Horace Mann Educators Corporation
|
|
Annual Report on Form 10-K 71
|
|
|
|
Year Ended December 31,
|
||||||||||
|
|
|
2019
|
|
2018
|
|
2017
|
||||||
|
Comprehensive income (loss)
|
|
|
|
|
|
|
|
|
|
|||
|
Net income
|
|
$
|
184,443
|
|
|
$
|
18,343
|
|
|
$
|
169,459
|
|
|
Other comprehensive income (loss), net of tax:
|
|
|
|
|
|
|
|
|
|
|||
|
Change in net unrealized investment gains
(losses) on securities
|
|
133,507
|
|
|
(188,195
|
)
|
|
74,405
|
|
|||
|
Change in net funded status of benefit plans
|
|
1,418
|
|
|
1,032
|
|
|
734
|
|
|||
|
Cumulative effect of change in accounting principle
|
|
—
|
|
|
(15,041
|
)
|
|
—
|
|
|||
|
Other comprehensive income (loss)
|
|
134,925
|
|
|
(202,204
|
)
|
|
75,139
|
|
|||
|
Total
|
|
$
|
319,368
|
|
|
$
|
(183,861
|
)
|
|
$
|
244,598
|
|
|
72 Annual Report on Form 10-K
|
|
Horace Mann Educators Corporation
|
|
|
|
Year Ended December 31,
|
||||||||||
|
|
|
2019
|
|
2018
|
|
2017
|
||||||
|
Common stock, $0.001 par value
|
|
|
|
|
|
|
|
|
|
|||
|
Beginning balance
|
|
$
|
66
|
|
|
$
|
65
|
|
|
$
|
65
|
|
|
Options exercised
|
|
—
|
|
|
—
|
|
|
—
|
|
|||
|
Conversion of common stock units
|
|
—
|
|
|
—
|
|
|
—
|
|
|||
|
Conversion of restricted common stock units
|
|
—
|
|
|
1
|
|
|
—
|
|
|||
|
Ending balance
|
|
66
|
|
|
66
|
|
|
65
|
|
|||
|
|
|
|
|
|
|
|
||||||
|
Additional paid-in capital
|
|
|
|
|
|
|
||||||
|
Beginning balance
|
|
475,109
|
|
|
464,246
|
|
|
453,479
|
|
|||
|
Options exercised and conversion of common
stock units and restricted stock units
|
|
(555
|
)
|
|
3,008
|
|
|
2,962
|
|
|||
|
Share-based compensation expense
|
|
6,408
|
|
|
7,855
|
|
|
7,805
|
|
|||
|
Ending balance
|
|
480,962
|
|
|
475,109
|
|
|
464,246
|
|
|||
|
|
|
|
|
|
|
|
||||||
|
Retained earnings
|
|
|
|
|
|
|
||||||
|
Beginning balance
|
|
1,216,582
|
|
|
1,231,177
|
|
|
1,155,732
|
|
|||
|
Net income
|
|
184,443
|
|
|
18,343
|
|
|
169,459
|
|
|||
|
Dividends, 2019, $1.15 per share; 2018, $1.14 per share;
2017, $1.10 per share
|
|
(48,486
|
)
|
|
(47,979
|
)
|
|
(46,114
|
)
|
|||
|
Reclassification of deferred taxes
|
|
—
|
|
|
—
|
|
|
(47,900
|
)
|
|||
|
Cumulative effect of change in accounting principle
|
|
—
|
|
|
15,041
|
|
|
—
|
|
|||
|
Ending balance
|
|
1,352,539
|
|
|
1,216,582
|
|
|
1,231,177
|
|
|||
|
|
|
|
|
|
|
|
||||||
|
Accumulated other comprehensive income (loss), net of tax:
|
|
|
|
|
|
|
||||||
|
Beginning balance
|
|
84,756
|
|
|
286,960
|
|
|
163,921
|
|
|||
|
Change in net unrealized investment gains (losses) on securities
|
|
133,507
|
|
|
(188,195
|
)
|
|
74,405
|
|
|||
|
Change in net funded status of benefit plans
|
|
1,418
|
|
|
1,032
|
|
|
734
|
|
|||
|
Reclassification of deferred taxes
|
|
—
|
|
|
—
|
|
|
47,900
|
|
|||
|
Cumulative effect of change in accounting principle
|
|
—
|
|
|
(15,041
|
)
|
|
—
|
|
|||
|
Ending balance
|
|
219,681
|
|
|
84,756
|
|
|
286,960
|
|
|||
|
|
|
|
|
|
|
|
||||||
|
Treasury stock, at cost
|
|
|
|
|
|
|
||||||
|
Beginning balance
|
|
(485,963
|
)
|
|
(480,875
|
)
|
|
(479,215
|
)
|
|||
|
Acquisition of shares
|
|
—
|
|
|
(5,088
|
)
|
|
(1,660
|
)
|
|||
|
Ending balance
|
|
(485,963
|
)
|
|
(485,963
|
)
|
|
(480,875
|
)
|
|||
|
Shareholders' equity at end of period
|
|
$
|
1,567,285
|
|
|
$
|
1,290,550
|
|
|
$
|
1,501,573
|
|
|
Horace Mann Educators Corporation
|
|
Annual Report on Form 10-K 73
|
|
|
|
Year Ended December 31,
|
||||||||||
|
|
|
2019
|
|
2018
|
|
2017
|
||||||
|
Cash flows from operating activities
|
|
|
|
|
|
|
|
|
|
|||
|
Net income
|
|
$
|
184,443
|
|
|
$
|
18,343
|
|
|
$
|
169,459
|
|
|
Adjustments to reconcile net income to net cash provided
by operating activities:
|
|
|
|
|
|
|
||||||
|
Net investment (gains) losses
|
|
(153,340
|
)
|
|
12,543
|
|
|
3,406
|
|
|||
|
Amortization of premiums and accretion of discounts on
fixed maturity securities, net
|
|
3,806
|
|
|
(10,095
|
)
|
|
(13,385
|
)
|
|||
|
Depreciation and intangible asset amortization
|
|
15,629
|
|
|
7,357
|
|
|
6,615
|
|
|||
|
Share-based compensation expense
|
|
7,338
|
|
|
8,346
|
|
|
8,592
|
|
|||
|
Other expense - goodwill impairment
|
|
28,025
|
|
|
—
|
|
|
—
|
|
|||
|
Changes in:
|
|
|
|
|
|
|
||||||
|
Accrued investment income
|
|
46,858
|
|
|
4,449
|
|
|
(3,404
|
)
|
|||
|
Insurance liabilities
|
|
(96,802
|
)
|
|
203,370
|
|
|
119,311
|
|
|||
|
Premium receivables
|
|
(5,031
|
)
|
|
(10,026
|
)
|
|
(12,917
|
)
|
|||
|
Deferred policy acquisition costs
|
|
(1,274
|
)
|
|
(783
|
)
|
|
(7,967
|
)
|
|||
|
Reinsurance recoverables
|
|
22,006
|
|
|
(21,317
|
)
|
|
11
|
|
|||
|
Income tax liabilities
|
|
28,726
|
|
|
(3,383
|
)
|
|
(4,620
|
)
|
|||
|
Other operating assets and liabilities
|
|
53,406
|
|
|
(2,048
|
)
|
|
(1,692
|
)
|
|||
|
Other
|
|
(6,217
|
)
|
|
(5,868
|
)
|
|
(6,823
|
)
|
|||
|
Net cash provided by operating activities
|
|
127,573
|
|
|
200,888
|
|
|
256,586
|
|
|||
|
|
|
|
|
|
|
|
||||||
|
Cash flows from investing activities
|
|
|
|
|
|
|
|
|
|
|||
|
Fixed maturity securities
|
|
|
|
|
|
|
|
|
|
|||
|
Purchases
|
|
(1,058,747
|
)
|
|
(1,428,889
|
)
|
|
(1,569,220
|
)
|
|||
|
Sales
|
|
805,887
|
|
|
625,527
|
|
|
500,760
|
|
|||
|
Maturities, paydowns, calls and redemptions
|
|
799,526
|
|
|
737,535
|
|
|
927,665
|
|
|||
|
Equity securities
|
|
|
|
|
|
|
||||||
|
Purchases
|
|
(15,583
|
)
|
|
(13,430
|
)
|
|
(32,312
|
)
|
|||
|
Sales and repayments
|
|
33,502
|
|
|
25,498
|
|
|
53,100
|
|
|||
|
Limited partnership interests
|
|
|
|
|
|
|
||||||
|
Purchases
|
|
(129,389
|
)
|
|
(93,545
|
)
|
|
(103,200
|
)
|
|||
|
Sales
|
|
91,587
|
|
|
16,997
|
|
|
20,234
|
|
|||
|
Change in short-term and other investments, net
|
|
(49,325
|
)
|
|
(56,192
|
)
|
|
(25,691
|
)
|
|||
|
Acquisition of businesses, net of cash acquired
|
|
(421,516
|
)
|
|
—
|
|
|
—
|
|
|||
|
Net cash provided by (used in) investing activities
|
|
55,942
|
|
|
(186,499
|
)
|
|
(228,664
|
)
|
|||
|
|
|
|
|
|
|
|
||||||
|
Cash flows from financing activities
|
|
|
|
|
|
|
|
|
|
|||
|
Dividends paid to shareholders
|
|
(47,333
|
)
|
|
(46,689
|
)
|
|
(46,114
|
)
|
|||
|
Principal borrowings on senior revolving credit facility
|
|
135,000
|
|
|
—
|
|
|
—
|
|
|||
|
FHLB borrowings
|
|
—
|
|
|
—
|
|
|
50,000
|
|
|||
|
Acquisition of treasury stock
|
|
—
|
|
|
(5,088
|
)
|
|
(1,660
|
)
|
|||
|
Proceeds from exercise of stock options
|
|
1,730
|
|
|
3,627
|
|
|
4,190
|
|
|||
|
Withholding tax payments on RSUs tendered
|
|
(3,680
|
)
|
|
(3,165
|
)
|
|
(3,245
|
)
|
|||
|
Annuity contracts: variable, fixed and FHLB funding agreements
|
|
|
|
|
|
|
|
|
|
|||
|
Deposits
|
|
637,538
|
|
|
489,097
|
|
|
453,146
|
|
|||
|
Benefits, withdrawals and net transfers to Separate Account
(variable annuity) assets
|
|
(419,001
|
)
|
|
(473,003
|
)
|
|
(411,061
|
)
|
|||
|
Principal repayment on FHLB funding agreements
|
|
(305,005
|
)
|
|
—
|
|
|
—
|
|
|||
|
Transfer of Company 401(k) to a third-party provider
|
|
—
|
|
|
—
|
|
|
(77,898
|
)
|
|||
|
Life policy accounts
|
|
|
|
|
|
|
|
|
|
|||
|
Deposits
|
|
9,391
|
|
|
8,149
|
|
|
4,883
|
|
|||
|
Withdrawals and surrenders
|
|
(3,558
|
)
|
|
(4,910
|
)
|
|
(4,458
|
)
|
|||
|
Change in deposit asset on reinsurance, net
|
|
(150,434
|
)
|
|
—
|
|
|
—
|
|
|||
|
Change in book overdrafts
|
|
(24,561
|
)
|
|
21,872
|
|
|
(4,748
|
)
|
|||
|
Net cash used in financing activities
|
|
(169,913
|
)
|
|
(10,110
|
)
|
|
(36,965
|
)
|
|||
|
Net increase (decrease) in cash
|
|
13,602
|
|
|
4,279
|
|
|
(9,043
|
)
|
|||
|
Cash and restricted cash at beginning of period
|
|
11,906
|
|
|
7,627
|
|
|
16,670
|
|
|||
|
Cash and restricted cash at end of period
|
|
$
|
25,508
|
|
|
$
|
11,906
|
|
|
$
|
7,627
|
|
|
74 Annual Report on Form 10-K
|
|
Horace Mann Educators Corporation
|
|
Horace Mann Educators Corporation
|
|
Annual Report on Form 10-K 75
|
|
76 Annual Report on Form 10-K
|
|
Horace Mann Educators Corporation
|
|
Horace Mann Educators Corporation
|
|
Annual Report on Form 10-K 77
|
|
78 Annual Report on Form 10-K
|
|
Horace Mann Educators Corporation
|
|
($ in thousands)
|
|
December 31,
|
||||||
|
|
|
2019
|
|
2018
|
||||
|
Property and Casualty
|
|
$
|
28,616
|
|
|
$
|
30,033
|
|
|
Supplemental
|
|
1,967
|
|
|
N/A
|
|
||
|
Retirement (annuity)
|
|
185,294
|
|
|
209,231
|
|
||
|
Life
|
|
60,791
|
|
|
59,478
|
|
||
|
Total
|
|
$
|
276,668
|
|
|
$
|
298,742
|
|
|
Horace Mann Educators Corporation
|
|
Annual Report on Form 10-K 79
|
|
($ in thousands)
|
|
Year Ended December 31,
|
||||||||||
|
|
|
2019
|
|
2018
|
|
2017
|
||||||
|
Increase (decrease) to DAC amortization expense:
|
|
|
|
|
|
|
||||||
|
Retirement
|
|
$
|
3,480
|
|
|
$
|
3,948
|
|
|
$
|
1,081
|
|
|
Life
|
|
(267
|
)
|
|
283
|
|
|
(200
|
)
|
|||
|
Total
|
|
$
|
3,213
|
|
|
$
|
4,231
|
|
|
$
|
881
|
|
|
80 Annual Report on Form 10-K
|
|
Horace Mann Educators Corporation
|
|
Horace Mann Educators Corporation
|
|
Annual Report on Form 10-K 81
|
|
($ in thousands)
|
|
December 31,
|
||||||
|
|
|
2019
|
|
2018
|
||||
|
Property and equipment
|
|
$
|
166,583
|
|
|
$
|
142,243
|
|
|
Less: accumulated depreciation
|
|
106,458
|
|
|
101,267
|
|
||
|
Total
|
|
$
|
60,125
|
|
|
$
|
40,976
|
|
|
($ in thousands)
|
|
December 31,
|
||||||
|
|
|
2019
|
|
2018
|
||||
|
Investment contract reserves
|
|
$
|
4,675,774
|
|
|
$
|
4,555,856
|
|
|
Policy reserves
|
|
1,558,678
|
|
|
1,155,337
|
|
||
|
Total
|
|
$
|
6,234,452
|
|
|
$
|
5,711,193
|
|
|
82 Annual Report on Form 10-K
|
|
Horace Mann Educators Corporation
|
|
($ in thousands)
|
|
December 31,
|
||||||
|
|
|
2019
|
|
2018
|
||||
|
GMDB reserve
|
|
$
|
126
|
|
|
$
|
258
|
|
|
Aggregate in-the-money death benefits under the GMDB provision
|
|
29,367
|
|
|
48,083
|
|
||
|
Variable annuity contract value distribution based on GMDB feature:
|
|
|
|
|
||||
|
No guarantee
|
|
28
|
%
|
|
30
|
%
|
||
|
Return of premium guarantee
|
|
67
|
%
|
|
65
|
%
|
||
|
Guarantee of premium roll-up at an annual rate of 3% or 5%
|
|
5
|
%
|
|
5
|
%
|
||
|
Total
|
|
100
|
%
|
|
100
|
%
|
||
|
Horace Mann Educators Corporation
|
|
Annual Report on Form 10-K 83
|
|
84 Annual Report on Form 10-K
|
|
Horace Mann Educators Corporation
|
|
|
|
Year Ended December 31,
|
||||||||||
|
|
|
2019
|
|
2018
|
|
2017
|
||||||
|
Number of stock options granted
|
|
282,040
|
|
|
223,208
|
|
|
222,828
|
|
|||
|
Weighted average grant date fair value of stock options granted
|
|
$
|
6.26
|
|
|
$
|
7.16
|
|
|
$
|
6.57
|
|
|
Weighted average assumptions:
|
|
|
|
|
|
|
||||||
|
Risk-free interest rate
|
|
2.5
|
%
|
|
2.6
|
%
|
|
2.0
|
%
|
|||
|
Expected dividend yield
|
|
2.9
|
%
|
|
2.6
|
%
|
|
2.5
|
%
|
|||
|
Expected life, in years
|
|
5.0
|
|
|
4.8
|
|
|
4.9
|
|
|||
|
Expected volatility (based on historical volatility)
|
|
21.9
|
%
|
|
21.5
|
%
|
|
21.4
|
%
|
|||
|
Horace Mann Educators Corporation
|
|
Annual Report on Form 10-K 85
|
|
($ in thousands)
|
|
Year Ended December 31,
|
||||||||||
|
|
|
2019
|
|
2018
|
|
2017
|
||||||
|
Basic:
|
|
|
|
|
|
|
||||||
|
Net income for the period
|
|
$
|
184,443
|
|
|
$
|
18,343
|
|
|
$
|
169,459
|
|
|
Weighted average number of common shares
during the period (in thousands)
|
|
41,738
|
|
|
41,570
|
|
|
41,365
|
|
|||
|
Net income per share - basic
|
|
$
|
4.42
|
|
|
$
|
0.44
|
|
|
$
|
4.10
|
|
|
|
|
|
|
|
|
|
||||||
|
Diluted:
|
|
|
|
|
|
|
||||||
|
Net income for the period
|
|
$
|
184,443
|
|
|
$
|
18,343
|
|
|
$
|
169,459
|
|
|
Weighted average number of common shares
during the period (in thousands)
|
|
41,738
|
|
|
41,570
|
|
|
41,365
|
|
|||
|
Weighted average number of common equivalent shares to reflect the dilutive effect of common stock equivalent securities (in thousands):
|
|
|
|
|
|
|
||||||
|
Stock options
|
|
79
|
|
|
100
|
|
|
112
|
|
|||
|
CSUs related to deferred compensation for employees
|
|
—
|
|
|
25
|
|
|
25
|
|
|||
|
RSUs related to incentive compensation
|
|
132
|
|
|
199
|
|
|
63
|
|
|||
|
Total common and common equivalent shares adjusted
to calculate diluted earnings per share (in thousands)
|
|
41,949
|
|
|
41,894
|
|
|
41,565
|
|
|||
|
Net income per share - diluted
|
|
$
|
4.40
|
|
|
$
|
0.44
|
|
|
$
|
4.08
|
|
|
86 Annual Report on Form 10-K
|
|
Horace Mann Educators Corporation
|
|
($ in thousands)
|
|
Year Ended December 31,
|
||||||||||
|
|
|
2019
|
|
2018
|
|
2017
|
||||||
|
Net income
|
|
$
|
184,443
|
|
|
$
|
18,343
|
|
|
$
|
169,459
|
|
|
Other comprehensive income (loss):
|
|
|
|
|
|
|
||||||
|
Change in net unrealized investment gains (losses) on securities:
|
|
|
|
|
|
|
||||||
|
Net unrealized investment gains (losses) on securities arising
during the period
|
|
327,363
|
|
|
(275,094
|
)
|
|
105,475
|
|
|||
|
Less: reclassification adjustment for net investment gains (losses)
included in income before income tax
|
|
157,423
|
|
|
(16,363
|
)
|
|
(4,863
|
)
|
|||
|
Total, before tax
|
|
169,940
|
|
|
(258,731
|
)
|
|
110,338
|
|
|||
|
Income tax expense (benefit)
|
|
36,433
|
|
|
(55,495
|
)
|
|
35,933
|
|
|||
|
Total, net of tax
|
|
133,507
|
|
|
(203,236
|
)
|
|
74,405
|
|
|||
|
Change in net funded status of benefit plans:
|
|
|
|
|
|
|
||||||
|
Before tax
|
|
1,805
|
|
|
1,294
|
|
|
1,461
|
|
|||
|
Income tax expense
|
|
387
|
|
|
262
|
|
|
727
|
|
|||
|
Total, net of tax
|
|
1,418
|
|
|
1,032
|
|
|
734
|
|
|||
|
Total comprehensive income (loss)
|
|
$
|
319,368
|
|
|
$
|
(183,861
|
)
|
|
$
|
244,598
|
|
|
Horace Mann Educators Corporation
|
|
Annual Report on Form 10-K 87
|
|
($ in thousands)
|
|
Net Unrealized
Investment Gains (Losses) on
Securities (1)(2)
|
|
Net Funded
Status of
Benefit Plans (1)
|
|
Total (1)(3)
|
||||||
|
Beginning balance, January 1, 2019
|
|
$
|
96,941
|
|
|
$
|
(12,185
|
)
|
|
$
|
84,756
|
|
|
Other comprehensive income (loss) before reclassifications
|
|
257,871
|
|
|
1,418
|
|
|
259,289
|
|
|||
|
Amounts reclassified from AOCI
|
|
(124,364
|
)
|
|
—
|
|
|
(124,364
|
)
|
|||
|
Net current period other comprehensive income (loss)
|
|
133,507
|
|
|
1,418
|
|
|
134,925
|
|
|||
|
Ending balance, December 31, 2019
|
|
$
|
230,448
|
|
|
$
|
(10,767
|
)
|
|
$
|
219,681
|
|
|
|
|
|
|
|
|
|
||||||
|
Beginning balance, January 1, 2018
|
|
$
|
300,177
|
|
|
$
|
(13,217
|
)
|
|
$
|
286,960
|
|
|
Other comprehensive income (loss) before reclassifications
|
|
(201,122
|
)
|
|
1,032
|
|
|
(200,090
|
)
|
|||
|
Amounts reclassified from AOCI
|
|
12,927
|
|
|
—
|
|
|
12,927
|
|
|||
|
Cumulative effect of change in accounting principle (4)
|
|
(15,041
|
)
|
|
—
|
|
|
(15,041
|
)
|
|||
|
Net current period other comprehensive income (loss)
|
|
(203,236
|
)
|
|
1,032
|
|
|
(202,204
|
)
|
|||
|
Ending balance, December 31, 2018
|
|
$
|
96,941
|
|
|
$
|
(12,185
|
)
|
|
$
|
84,756
|
|
|
|
|
|
|
|
|
|
||||||
|
Beginning balance, January 1, 2017
|
|
$
|
175,738
|
|
|
$
|
(11,817
|
)
|
|
$
|
163,921
|
|
|
Other comprehensive income (loss) before reclassifications
|
|
71,244
|
|
|
734
|
|
|
71,978
|
|
|||
|
Amounts reclassified from AOCI
|
|
3,161
|
|
|
—
|
|
|
3,161
|
|
|||
|
Reclassification of deferred taxes (3)
|
|
50,034
|
|
|
(2,134
|
)
|
|
47,900
|
|
|||
|
Net current period other comprehensive income (loss)
|
|
124,439
|
|
|
(1,400
|
)
|
|
123,039
|
|
|||
|
Ending balance, December 31, 2017
|
|
$
|
300,177
|
|
|
$
|
(13,217
|
)
|
|
$
|
286,960
|
|
|
(2)
|
The pretax amounts reclassified from AOCI, $157.4 million, $(16.4) million and $(4.9) million, are included in net investment gains (losses) and the related tax expenses, $33.1 million, $(3.4) million and $(1.7) million, are included in income tax expense in the Consolidated Statements of Operations for the years ended December 31, 2019, 2018 and 2017, respectively.
|
|
(3)
|
For the period ended December 31, 2017, deferred taxes attributable to net unrealized investment gains (losses) on fixed maturity and equity securities and Defined benefit plans were re-measured as a result of the enactment of the Tax Cuts and Jobs Act of 2017 (TCJA). ASC 740, Income Taxes, requires that the income tax effect from the deferred tax re-measurement be reflected in the Company’s income tax expense, even if the deferred taxes being re-measured were originally established through AOCI. The mismatch between deferred taxes established in AOCI at 35% and re-measuring these same deferred taxes at 21% through income tax expense results in stranded deferred taxes in AOCI. On February 14, 2018, the Financial Accounting Standards Board (FASB) issued accounting guidance that permits recognition of a reclassification adjustment between AOCI and Retained earnings for stranded deferred tax amounts related to the reduced corporate tax rate enacted under the TCJA. As permitted under its provisions, the Company early adopted the accounting guidance effective for the quarterly period that ended December 31, 2017 and has elected to reclassify the stranded deferred tax amounts. The impact from early adoption resulted in an increase to AOCI and a reduction to Retained earnings of approximately $47.9 million; representing the stranded deferred tax liabilities of $50.0 million and $(2.1) million for net unrealized investment gains (losses) on fixed maturity and equity securities and Defined benefit plans, respectively.
|
|
(4)
|
The Company adopted guidance on January 1, 2018 that resulted in reclassifying $15.0 million of after tax net unrealized gains on equity securities from AOCI to Retained earnings.
|
|
88 Annual Report on Form 10-K
|
|
Horace Mann Educators Corporation
|
|
Horace Mann Educators Corporation
|
|
Annual Report on Form 10-K 89
|
|
(1)
|
Intangible assets consist of the value of business acquired, value of distribution acquired, agency relationships, trade names and state licenses. The intangible assets that are amortizable have a total weighted average useful life of 23 years. See Note 7 for further information.
|
|
(2)
|
The amount of goodwill that is expected to be deductible for federal income tax purposes is $17.9 million.
|
|
90 Annual Report on Form 10-K
|
|
Horace Mann Educators Corporation
|
|
($ in thousands, except per share data)
|
|
Unaudited
|
||||||
|
|
|
Year Ended December 31,
|
||||||
|
|
|
2019
|
|
2018
|
||||
|
Total revenues
|
|
$
|
1,507,352
|
|
|
$
|
1,339,896
|
|
|
Total expenses
|
|
1,259,213
|
|
|
1,288,690
|
|
||
|
Income before income taxes
|
|
248,139
|
|
|
51,206
|
|
||
|
Net income
|
|
$
|
193,755
|
|
|
$
|
43,373
|
|
|
|
|
|
|
|
||||
|
Net income per share: (1)
|
|
|
|
|
||||
|
Basic
|
|
$
|
4.64
|
|
|
$
|
1.04
|
|
|
Diluted
|
|
$
|
4.62
|
|
|
$
|
1.04
|
|
|
(1)
|
The unaudited pro forma basic and diluted net income per share calculations are based on the Company's historical basic and diluted weighted average number of shares outstanding for the years ended December 31, 2019 and 2018, respectively.
|
|
($ in thousands)
|
|
Year Ended December 31,
|
||||||||||
|
|
|
2019
|
|
2018
|
|
2017
|
||||||
|
Fixed maturity securities
|
|
$
|
283,228
|
|
|
$
|
353,303
|
|
|
$
|
354,290
|
|
|
Equity securities
|
|
4,923
|
|
|
6,017
|
|
|
6,411
|
|
|||
|
Limited partnership interests
|
|
25,694
|
|
|
15,406
|
|
|
12,555
|
|
|||
|
Short-term and other investments
|
|
60,703
|
|
|
11,981
|
|
|
10,214
|
|
|||
|
Total investment income
|
|
374,548
|
|
|
386,707
|
|
|
383,470
|
|
|||
|
Investment expenses
|
|
(9,484
|
)
|
|
(10,200
|
)
|
|
(9,840
|
)
|
|||
|
Net investment income
|
|
$
|
365,064
|
|
|
$
|
376,507
|
|
|
$
|
373,630
|
|
|
Horace Mann Educators Corporation
|
|
Annual Report on Form 10-K 91
|
|
($ in thousands)
|
|
Year Ended December 31,
|
||||||||||
|
|
|
2019
|
|
2018
|
|
2017
|
||||||
|
Fixed maturity securities (1)
|
|
$
|
141,448
|
|
|
$
|
(5,713
|
)
|
|
$
|
(8,867
|
)
|
|
Equity securities
|
|
15,975
|
|
|
(10,649
|
)
|
|
4,003
|
|
|||
|
Short-term investments and other
|
|
(4,083
|
)
|
|
3,819
|
|
|
1,458
|
|
|||
|
Net investment gains (losses)
|
|
$
|
153,340
|
|
|
$
|
(12,543
|
)
|
|
$
|
(3,406
|
)
|
|
(1)
|
Net investment gains realized on fixed maturity securities include a $135.3 million realized investment gain associated with a transfer of investments to a reinsurer as consideration paid during the second quarter of 2019 in connection with the reinsurance of a $2.9 billion block of in force fixed and variable annuity business. See Notes 6 and 17 for further information.
|
|
($ in thousands)
|
|
Year Ended December 31,
|
||||||||||
|
|
|
2019
|
|
2018
|
|
2017
|
||||||
|
Impairment write-downs
|
|
$
|
(1,105
|
)
|
|
$
|
—
|
|
|
$
|
(1,778
|
)
|
|
Change in intent write-downs
|
|
(275
|
)
|
|
(1,530
|
)
|
|
(10,842
|
)
|
|||
|
Net OTTI losses recognized in earnings
|
|
(1,380
|
)
|
|
(1,530
|
)
|
|
(12,620
|
)
|
|||
|
Sales and other, net
|
|
151,495
|
|
|
3,491
|
|
|
7,756
|
|
|||
|
Change in fair value - equity securities (1)
|
|
7,308
|
|
|
(18,323
|
)
|
|
—
|
|
|||
|
Change in fair value and gains (losses) realized
on settlements - derivatives
|
|
(4,083
|
)
|
|
3,819
|
|
|
1,458
|
|
|||
|
Net investment gains (losses)
|
|
$
|
153,340
|
|
|
$
|
(12,543
|
)
|
|
$
|
(3,406
|
)
|
|
(1)
|
Effective January 1, 2018, with the adoption of new accounting guidance for recognition and measurement of financial instruments, equity securities are reported at fair value with changes in fair value recognized in Net investment gains (losses) and are no longer included in impairment write-downs or change in intent write-downs.
|
|
92 Annual Report on Form 10-K
|
|
Horace Mann Educators Corporation
|
|
($ in thousands)
|
|
Amortized
Cost
|
|
Unrealized
Gains
|
|
Unrealized
Losses
|
|
Fair
Value
|
||||||||
|
December 31, 2019
|
|
|
|
|
|
|
|
|
||||||||
|
Fixed maturity securities
|
|
|
|
|
|
|
|
|
||||||||
|
U.S. Government and federally
sponsored agency obligations: (1)
|
|
|
|
|
|
|
|
|
||||||||
|
Mortgage-backed securities
|
|
$
|
684,543
|
|
|
$
|
41,263
|
|
|
$
|
1,487
|
|
|
$
|
724,319
|
|
|
Other, including U.S. Treasury securities
|
|
436,665
|
|
|
22,824
|
|
|
621
|
|
|
458,868
|
|
||||
|
Municipal bonds
|
|
1,545,787
|
|
|
141,996
|
|
|
1,580
|
|
|
1,686,203
|
|
||||
|
Foreign government bonds
|
|
42,801
|
|
|
2,569
|
|
|
—
|
|
|
45,370
|
|
||||
|
Corporate bonds
|
|
1,464,444
|
|
|
118,775
|
|
|
1,795
|
|
|
1,581,424
|
|
||||
|
Other mortgage-backed securities
|
|
1,282,740
|
|
|
20,883
|
|
|
8,131
|
|
|
1,295,492
|
|
||||
|
Totals
|
|
$
|
5,456,980
|
|
|
$
|
348,310
|
|
|
$
|
13,614
|
|
|
$
|
5,791,676
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
|
December 31, 2018
|
|
|
|
|
|
|
|
|
||||||||
|
Fixed maturity securities
|
|
|
|
|
|
|
|
|
||||||||
|
U.S. Government and federally
sponsored agency obligations: (1)
|
|
|
|
|
|
|
|
|
||||||||
|
Mortgage-backed securities
|
|
$
|
778,038
|
|
|
$
|
22,724
|
|
|
$
|
13,321
|
|
|
$
|
787,441
|
|
|
Other, including U.S. Treasury securities
|
|
835,096
|
|
|
16,127
|
|
|
17,681
|
|
|
833,542
|
|
||||
|
Municipal bonds
|
|
1,884,313
|
|
|
133,150
|
|
|
13,494
|
|
|
2,003,969
|
|
||||
|
Foreign government bonds
|
|
83,343
|
|
|
2,321
|
|
|
760
|
|
|
84,904
|
|
||||
|
Corporate bonds
|
|
2,054,105
|
|
|
64,296
|
|
|
38,891
|
|
|
2,079,510
|
|
||||
|
Other mortgage-backed securities
|
|
1,739,016
|
|
|
10,467
|
|
|
23,531
|
|
|
1,725,952
|
|
||||
|
Totals
|
|
$
|
7,373,911
|
|
|
$
|
249,085
|
|
|
$
|
107,678
|
|
|
$
|
7,515,318
|
|
|
(1)
|
Fair value includes securities issued by Federal National Mortgage Association (FNMA) of $405.1 million and $441.3 million; Federal Home Loan Mortgage Corporation (FHLMC) of $283.1 million and $417.3 million; and Government National Mortgage Association (GNMA) of $147.4 million and $96.5 million as of December 31, 2019 and 2018, respectively.
|
|
Horace Mann Educators Corporation
|
|
Annual Report on Form 10-K 93
|
|
($ in thousands)
|
|
12 months or less
|
|
More than 12 months
|
|
Total
|
||||||||||||||||||
|
|
|
Fair Value
|
|
Gross
Unrealized
Losses
|
|
Fair Value
|
|
Gross
Unrealized
Losses
|
|
Fair Value
|
|
Gross
Unrealized
Losses
|
||||||||||||
|
December 31, 2019
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
|
Fixed maturity securities
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
|
U.S. Government and federally
sponsored agency obligations:
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
|
Mortgage-backed securities
|
|
$
|
72,422
|
|
|
$
|
1,282
|
|
|
$
|
2,620
|
|
|
$
|
205
|
|
|
$
|
75,042
|
|
|
$
|
1,487
|
|
|
Other
|
|
38,341
|
|
|
619
|
|
|
1,527
|
|
|
2
|
|
|
39,868
|
|
|
621
|
|
||||||
|
Municipal bonds
|
|
91,195
|
|
|
977
|
|
|
9,160
|
|
|
603
|
|
|
100,355
|
|
|
1,580
|
|
||||||
|
Foreign government bonds
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||||
|
Corporate bonds
|
|
58,198
|
|
|
886
|
|
|
16,622
|
|
|
909
|
|
|
74,820
|
|
|
1,795
|
|
||||||
|
Other mortgage-backed securities
|
|
218,710
|
|
|
1,970
|
|
|
442,791
|
|
|
6,161
|
|
|
661,501
|
|
|
8,131
|
|
||||||
|
Total
|
|
$
|
478,866
|
|
|
$
|
5,734
|
|
|
$
|
472,720
|
|
|
$
|
7,880
|
|
|
$
|
951,586
|
|
|
$
|
13,614
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
|
Number of positions with a
gross unrealized loss
|
|
330
|
|
|
|
|
137
|
|
|
|
|
467
|
|
|
|
|||||||||
|
Fair value as a percentage of total fixed
maturities securities fair value
|
|
8.3
|
%
|
|
|
|
8.2
|
%
|
|
|
|
16.5
|
%
|
|
|
|||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
|
December 31, 2018
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
|
Fixed maturity securities
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
|
U.S. Government and federally
sponsored agency obligations:
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
|
Mortgage-backed securities
|
|
$
|
193,447
|
|
|
$
|
5,026
|
|
|
$
|
157,295
|
|
|
$
|
8,295
|
|
|
$
|
350,742
|
|
|
$
|
13,321
|
|
|
Other
|
|
263,497
|
|
|
6,746
|
|
|
246,213
|
|
|
10,935
|
|
|
509,710
|
|
|
17,681
|
|
||||||
|
Municipal bonds
|
|
291,869
|
|
|
7,603
|
|
|
95,297
|
|
|
5,891
|
|
|
387,166
|
|
|
13,494
|
|
||||||
|
Foreign government bonds
|
|
16,250
|
|
|
760
|
|
|
—
|
|
|
—
|
|
|
16,250
|
|
|
760
|
|
||||||
|
Corporate bonds
|
|
818,519
|
|
|
27,429
|
|
|
99,171
|
|
|
11,462
|
|
|
917,690
|
|
|
38,891
|
|
||||||
|
Other mortgage-backed securities
|
|
913,858
|
|
|
16,076
|
|
|
291,442
|
|
|
7,455
|
|
|
1,205,300
|
|
|
23,531
|
|
||||||
|
Total
|
|
$
|
2,497,440
|
|
|
$
|
63,640
|
|
|
$
|
889,418
|
|
|
$
|
44,038
|
|
|
$
|
3,386,858
|
|
|
$
|
107,678
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
|
Number of positions with a
gross unrealized loss
|
|
1,052
|
|
|
|
|
359
|
|
|
|
|
1,411
|
|
|
|
|||||||||
|
Fair value as a percentage of total fixed
maturities and equity securities fair value
|
|
32.7
|
%
|
|
|
|
11.7
|
%
|
|
|
|
44.4
|
%
|
|
|
|||||||||
|
94 Annual Report on Form 10-K
|
|
Horace Mann Educators Corporation
|
|
($ in thousands)
|
|
Year Ended December 31,
|
||||||
|
|
|
2019
|
|
2018
|
||||
|
Cumulative credit loss (1)
|
|
|
|
|
||||
|
Beginning of period
|
|
$
|
1,529
|
|
|
$
|
3,825
|
|
|
New credit losses
|
|
—
|
|
|
—
|
|
||
|
Increases to previously recognized credit losses
|
|
—
|
|
|
246
|
|
||
|
Losses related to securities sold or paid down during the period
|
|
—
|
|
|
(2,542
|
)
|
||
|
End of period
|
|
$
|
1,529
|
|
|
$
|
1,529
|
|
|
(1)
|
The cumulative credit loss amounts exclude OTTI losses on securities held as of the periods indicated that the Company intended to sell or it was more likely than not that the Company would be required to sell the security before the recovery of the amortized cost basis.
|
|
($ in thousands)
|
|
December 31, 2019
|
|||||||||
|
|
|
Amortized
Cost
|
|
Fair
Value
|
|
Percent of
Total Fair
Value
|
|||||
|
Estimated expected maturity:
|
|
|
|
|
|
|
|||||
|
Due in 1 year or less
|
|
$
|
205,798
|
|
|
$
|
211,420
|
|
|
3.6
|
%
|
|
Due after 1 year through 5 years
|
|
1,541,749
|
|
|
1,587,300
|
|
|
27.4
|
%
|
||
|
Due after 5 years through 10 years
|
|
1,613,539
|
|
|
1,712,236
|
|
|
29.6
|
%
|
||
|
Due after 10 years through 20 years
|
|
1,393,503
|
|
|
1,512,769
|
|
|
26.1
|
%
|
||
|
Due after 20 years
|
|
702,391
|
|
|
767,951
|
|
|
13.3
|
%
|
||
|
Total
|
|
$
|
5,456,980
|
|
|
$
|
5,791,676
|
|
|
100.0
|
%
|
|
|
|
|
|
|
|
|
|||||
|
Average option-adjusted duration, in years
|
|
6.0
|
|
|
|
|
|
||||
|
Horace Mann Educators Corporation
|
|
Annual Report on Form 10-K 95
|
|
($ in thousands)
|
|
Year Ended December 31,
|
||||||||||
|
|
|
2019 (1)
|
|
2018
|
|
2017
|
||||||
|
Fixed maturity securities
|
|
|
|
|
|
|
||||||
|
Proceeds received
|
|
$
|
805,887
|
|
|
$
|
625,527
|
|
|
$
|
500,760
|
|
|
Gross gains realized
|
|
150,852
|
|
|
10,536
|
|
|
13,570
|
|
|||
|
Gross losses realized
|
|
(7,807
|
)
|
|
(14,932
|
)
|
|
(11,842
|
)
|
|||
|
|
|
|
|
|
|
|
||||||
|
Equity securities
|
|
|
|
|
|
|
||||||
|
Proceeds received
|
|
$
|
29,863
|
|
|
$
|
25,498
|
|
|
$
|
50,113
|
|
|
Gross gains realized
|
|
9,193
|
|
|
8,592
|
|
|
7,753
|
|
|||
|
Gross losses realized
|
|
(788
|
)
|
|
(917
|
)
|
|
(1,972
|
)
|
|||
|
(1)
|
Gross gains realized presented above include a $135.3 million realized investment gain associated with a transfer of investments to a reinsurer as consideration paid during the second quarter of 2019 in connection with the reinsurance of a $2.9 billion block of in force fixed and variable annuity business. See Notes 6 and 17 for further information.
|
|
($ in thousands)
|
|
Year Ended December 31,
|
||||||||||
|
|
|
2019
|
|
2018
|
|
2017
|
||||||
|
Net unrealized investment gains (losses) on fixed maturity
securities, net of tax
|
|
|
|
|
|
|
||||||
|
Beginning of period
|
|
$
|
111,712
|
|
|
$
|
286,176
|
|
|
$
|
202,941
|
|
|
Change in unrealized investment gains (losses)
on fixed maturity securities
|
|
277,062
|
|
|
(172,350
|
)
|
|
80,073
|
|
|||
|
Reclassification of net investment (gains)
losses on securities to net income
|
|
(124,364
|
)
|
|
12,927
|
|
|
3,162
|
|
|||
|
Cumulative effect of change in accounting principle (1)
|
|
—
|
|
|
(15,041
|
)
|
|
—
|
|
|||
|
End of period
|
|
$
|
264,410
|
|
|
$
|
111,712
|
|
|
$
|
286,176
|
|
|
(1)
|
Effective January 1, 2018, with the adoption of new accounting guidance for recognition and measurement of financial instruments, available for sale equity securities were reclassified to equity securities at fair value and the related net unrealized gains were reclassified from AOCI to Retained earnings.
|
|
96 Annual Report on Form 10-K
|
|
Horace Mann Educators Corporation
|
|
($ in thousands)
|
|
|
|
Gross
Amounts
Offset in the
|
|
Net Amounts
of Assets/
Liabilities
Presented
in the
|
|
Gross Amounts Not Offset
in the Consolidated
Balance Sheets
|
|
|
||||||||||||||
|
|
|
Gross
Amounts
|
|
Consolidated
Balance
Sheets
|
|
Consolidated
Balance
Sheets
|
|
Financial
Instruments
|
|
Cash
Collateral
Received
|
|
Net
Amount
|
||||||||||||
|
December 31, 2019
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
|
Asset derivatives
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
|
Free-standing derivatives
|
|
$
|
13,239
|
|
|
$
|
—
|
|
|
$
|
13,239
|
|
|
$
|
7,687
|
|
|
$
|
6,640
|
|
|
$
|
(1,088
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
|
December 31, 2018
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
|
Asset derivatives
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
|
Free-standing derivatives
|
|
2,647
|
|
|
—
|
|
|
2,647
|
|
|
—
|
|
|
1,868
|
|
|
779
|
|
||||||
|
Level 1
|
Unadjusted quoted prices in active markets for identical assets or liabilities. Level 1 assets and liabilities include fixed maturity and equity securities (both common stock and preferred stock) that are traded in an active exchange market, as well as U.S. Treasury securities.
|
|
Horace Mann Educators Corporation
|
|
Annual Report on Form 10-K 97
|
|
Level 2
|
Unadjusted observable inputs other than Level 1 prices such as quoted prices for similar assets or liabilities; quoted prices in markets that are not active; or other inputs that are observable or can be corroborated by observable market data for the assets or liabilities. Level 2 assets and liabilities include fixed maturity securities (1) with quoted prices that are traded less frequently than exchange-traded instruments or (2) values based on discounted cash flows with observable inputs. This category generally includes certain U.S. Government and agency mortgage-backed securities, non-agency structured securities, corporate fixed maturity securities, preferred stocks, derivatives and embedded derivatives.
|
|
Level 3
|
Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities. Level 3 assets and liabilities include financial instruments whose value is determined using pricing models, certain discounted cash flow methodologies, or similar techniques, as well as instruments for which the determination of fair value requires significant management judgment or estimation and for which the significant inputs are unobservable. This category generally includes certain private debt and equity investments, as well as embedded derivatives.
|
|
98 Annual Report on Form 10-K
|
|
Horace Mann Educators Corporation
|
|
•
|
Fixed maturity securities, as described above.
|
|
•
|
Equity securities, as described above.
|
|
•
|
Short-term fixed maturity securities — Because of the nature of these assets, carrying amounts generally approximate fair values.
|
|
•
|
Derivatives, all call options — Fair values are based on the amount of cash expected to be received to settle each derivative on the reporting date. These amounts are obtained from each of the counterparties using industry accepted valuation models and observable inputs. Significant inputs include contractual terms, underlying index prices, market volatilities, interest rates and dividend yields.
|
|
•
|
FHLB membership and activity stocks — Fair value is based on redemption value, which is equal to par value.
|
|
Horace Mann Educators Corporation
|
|
Annual Report on Form 10-K 99
|
|
($ in thousands)
|
|
Carrying
|
|
Fair
|
|
Fair Value Measurements at
Reporting Date Using
|
||||||||||||||
|
|
|
Amount
|
|
Value
|
|
Level 1
|
|
Level 2
|
|
Level 3
|
||||||||||
|
December 31, 2019
|
|
|
|
|
|
|
|
|
|
|
||||||||||
|
Financial Assets
|
|
|
|
|
|
|
|
|
|
|
||||||||||
|
Investments
|
|
|
|
|
|
|
|
|
|
|
||||||||||
|
Fixed maturity securities
|
|
|
|
|
|
|
|
|
|
|
||||||||||
|
U.S. Government and federally
sponsored agency obligations:
|
|
|
|
|
|
|
|
|
|
|
||||||||||
|
Mortgage-backed securities
|
|
$
|
724,319
|
|
|
$
|
724,319
|
|
|
$
|
—
|
|
|
$
|
711,004
|
|
|
$
|
13,315
|
|
|
Other, including U.S. Treasury securities
|
|
458,868
|
|
|
458,868
|
|
|
17,699
|
|
|
441,169
|
|
|
—
|
|
|||||
|
Municipal bonds
|
|
1,686,203
|
|
|
1,686,203
|
|
|
—
|
|
|
1,641,912
|
|
|
44,291
|
|
|||||
|
Foreign government bonds
|
|
45,370
|
|
|
45,370
|
|
|
—
|
|
|
45,370
|
|
|
—
|
|
|||||
|
Corporate bonds
|
|
1,581,424
|
|
|
1,581,424
|
|
|
14,470
|
|
|
1,463,002
|
|
|
103,952
|
|
|||||
|
Other mortgage-backed securities
|
|
1,295,492
|
|
|
1,295,492
|
|
|
—
|
|
|
1,161,979
|
|
|
133,513
|
|
|||||
|
Total fixed maturity securities
|
|
5,791,676
|
|
|
5,791,676
|
|
|
32,169
|
|
|
5,464,436
|
|
|
295,071
|
|
|||||
|
Equity securities
|
|
101,864
|
|
|
101,864
|
|
|
49,834
|
|
|
51,923
|
|
|
107
|
|
|||||
|
Short-term investments
|
|
172,667
|
|
|
172,667
|
|
|
172,667
|
|
|
—
|
|
|
—
|
|
|||||
|
Other investments
|
|
25,997
|
|
|
25,997
|
|
|
—
|
|
|
25,997
|
|
|
—
|
|
|||||
|
Totals
|
|
$
|
6,092,204
|
|
|
$
|
6,092,204
|
|
|
$
|
254,670
|
|
|
$
|
5,542,356
|
|
|
$
|
295,178
|
|
|
Separate Account (variable annuity) assets (1)
|
|
$
|
2,490,469
|
|
|
$
|
2,490,469
|
|
|
$
|
2,490,469
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
Financial Liabilities
|
|
|
|
|
|
|
|
|
|
|
||||||||||
|
Investment contract and life policy reserves,
embedded derivatives
|
|
$
|
1,314
|
|
|
$
|
1,314
|
|
|
$
|
—
|
|
|
$
|
1,314
|
|
|
$
|
—
|
|
|
Other policyholder funds, embedded derivatives
|
|
$
|
93,733
|
|
|
$
|
93,733
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
93,733
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
|
December 31, 2018
|
|
|
|
|
|
|
|
|
|
|
||||||||||
|
Financial Assets
|
|
|
|
|
|
|
|
|
|
|
||||||||||
|
Investments
|
|
|
|
|
|
|
|
|
|
|
||||||||||
|
Fixed maturity securities
|
|
|
|
|
|
|
|
|
|
|
||||||||||
|
U.S. Government and federally
sponsored agency obligations:
|
|
|
|
|
|
|
|
|
|
|
||||||||||
|
Mortgage-backed securities
|
|
$
|
787,441
|
|
|
$
|
787,441
|
|
|
$
|
—
|
|
|
$
|
784,224
|
|
|
$
|
3,217
|
|
|
Other, including U.S. Treasury securities
|
|
833,542
|
|
|
833,542
|
|
|
13,291
|
|
|
820,251
|
|
|
—
|
|
|||||
|
Municipal bonds
|
|
2,003,969
|
|
|
2,003,969
|
|
|
—
|
|
|
1,956,438
|
|
|
47,531
|
|
|||||
|
Foreign government bonds
|
|
84,904
|
|
|
84,904
|
|
|
—
|
|
|
84,904
|
|
|
—
|
|
|||||
|
Corporate bonds
|
|
2,079,510
|
|
|
2,079,510
|
|
|
12,281
|
|
|
1,986,487
|
|
|
80,742
|
|
|||||
|
Other mortgage-backed securities
|
|
1,725,952
|
|
|
1,725,952
|
|
|
—
|
|
|
1,608,958
|
|
|
116,994
|
|
|||||
|
Total fixed maturity securities
|
|
7,515,318
|
|
|
7,515,318
|
|
|
25,572
|
|
|
7,241,262
|
|
|
248,484
|
|
|||||
|
Equity securities
|
|
111,750
|
|
|
111,750
|
|
|
64,330
|
|
|
47,415
|
|
|
5
|
|
|||||
|
Short-term investments
|
|
122,222
|
|
|
122,222
|
|
|
117,296
|
|
|
4,926
|
|
|
—
|
|
|||||
|
Other investments
|
|
16,147
|
|
|
16,147
|
|
|
—
|
|
|
16,147
|
|
|
—
|
|
|||||
|
Totals
|
|
$
|
7,765,437
|
|
|
$
|
7,765,437
|
|
|
$
|
207,198
|
|
|
$
|
7,309,750
|
|
|
$
|
248,489
|
|
|
Separate Account (variable annuity) assets (1)
|
|
$
|
2,001,128
|
|
|
$
|
2,001,128
|
|
|
$
|
2,001,128
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
Financial Liabilities
|
|
|
|
|
|
|
|
|
|
|
||||||||||
|
Investment contract and life policy reserves,
embedded derivatives
|
|
$
|
248
|
|
|
$
|
248
|
|
|
$
|
—
|
|
|
$
|
248
|
|
|
$
|
—
|
|
|
Other policyholder funds, embedded derivatives
|
|
$
|
78,700
|
|
|
$
|
78,700
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
78,700
|
|
|
(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 Separate Account (variable annuity) assets.
|
|
100 Annual Report on Form 10-K
|
|
Horace Mann Educators Corporation
|
|
($ in thousands)
|
|
Financial Assets
|
|
Financial
Liabilities(1)
|
||||||||||||||||||||||||
|
|
|
Municipal
Bonds
|
|
Corporate
Bonds
|
|
Other
Mortgage-
Backed
Securities(2)
|
|
Total
Fixed
Maturity
Securities
|
|
Equity
Securities
|
|
Total
|
|
|
||||||||||||||
|
Beginning balance, January 1, 2019
|
|
$
|
47,531
|
|
|
$
|
80,742
|
|
|
$
|
120,211
|
|
|
$
|
248,484
|
|
|
$
|
5
|
|
|
$
|
248,489
|
|
|
$
|
78,700
|
|
|
Transfers into Level 3 (3)
|
|
—
|
|
|
33,475
|
|
|
56,766
|
|
|
90,241
|
|
|
65
|
|
|
90,306
|
|
|
—
|
|
|||||||
|
Transfers out of Level 3 (3)
|
|
—
|
|
|
(7,698
|
)
|
|
(2,568
|
)
|
|
(10,266
|
)
|
|
—
|
|
|
(10,266
|
)
|
|
—
|
|
|||||||
|
Total gains or losses
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||
|
Net investment gains (losses)
included in net income related
to financial assets
|
|
—
|
|
|
—
|
|
|
(1,105
|
)
|
|
(1,105
|
)
|
|
38
|
|
|
(1,067
|
)
|
|
—
|
|
|||||||
|
Net realized (gains) losses
included in net income related
to financial liabilities
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
12,636
|
|
|||||||
|
Net unrealized investment gains
(losses) included in OCI
|
|
474
|
|
|
4,461
|
|
|
6,100
|
|
|
11,035
|
|
|
—
|
|
|
11,035
|
|
|
—
|
|
|||||||
|
Purchases
|
|
—
|
|
|
2,483
|
|
|
—
|
|
|
2,483
|
|
|
—
|
|
|
2,483
|
|
|
—
|
|
|||||||
|
Issuances
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
10,039
|
|
|||||||
|
Sales
|
|
—
|
|
|
—
|
|
|
(607
|
)
|
|
(607
|
)
|
|
(1
|
)
|
|
(608
|
)
|
|
—
|
|
|||||||
|
Settlements
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||||
|
Paydowns, maturities and
distributions
|
|
(3,714
|
)
|
|
(9,511
|
)
|
|
(31,969
|
)
|
|
(45,194
|
)
|
|
—
|
|
|
(45,194
|
)
|
|
(7,642
|
)
|
|||||||
|
Ending balance, December 31, 2019
|
|
$
|
44,291
|
|
|
$
|
103,952
|
|
|
$
|
146,828
|
|
|
$
|
295,071
|
|
|
$
|
107
|
|
|
$
|
295,178
|
|
|
$
|
93,733
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||
|
Beginning balance, January 1, 2018
|
|
$
|
49,328
|
|
|
$
|
72,979
|
|
|
$
|
107,944
|
|
|
$
|
230,251
|
|
|
$
|
6
|
|
|
$
|
230,257
|
|
|
$
|
80,733
|
|
|
Transfers into Level 3 (3)
|
|
—
|
|
|
40,488
|
|
|
50,771
|
|
|
91,259
|
|
|
—
|
|
|
91,259
|
|
|
—
|
|
|||||||
|
Transfers out of Level 3 (3)
|
|
—
|
|
|
(11,279
|
)
|
|
(5,200
|
)
|
|
(16,479
|
)
|
|
—
|
|
|
(16,479
|
)
|
|
—
|
|
|||||||
|
Total gains or losses
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||
|
Net investment gains (losses)
included in net income related
to financial assets
|
|
—
|
|
|
(487
|
)
|
|
—
|
|
|
(487
|
)
|
|
3
|
|
|
(484
|
)
|
|
—
|
|
|||||||
|
Net realized (gains) losses
included in net income related
to financial liabilities
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(7,518
|
)
|
|||||||
|
Net unrealized investment gains
(losses) included in OCI
|
|
(1,195
|
)
|
|
(2,840
|
)
|
|
(5,570
|
)
|
|
(9,605
|
)
|
|
—
|
|
|
(9,605
|
)
|
|
—
|
|
|||||||
|
Purchases
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||||
|
Issuances
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
11,183
|
|
|||||||
|
Sales
|
|
—
|
|
|
(6,135
|
)
|
|
(187
|
)
|
|
(6,322
|
)
|
|
(4
|
)
|
|
(6,326
|
)
|
|
—
|
|
|||||||
|
Settlements
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||||
|
Paydowns, maturities and
distributions
|
|
(602
|
)
|
|
(11,984
|
)
|
|
(27,547
|
)
|
|
(40,133
|
)
|
|
—
|
|
|
(40,133
|
)
|
|
(5,698
|
)
|
|||||||
|
Ending balance, December 31, 2018
|
|
$
|
47,531
|
|
|
$
|
80,742
|
|
|
$
|
120,211
|
|
|
$
|
248,484
|
|
|
$
|
5
|
|
|
$
|
248,489
|
|
|
$
|
78,700
|
|
|
(1)
|
Represents embedded derivatives, all related to the Company's FIA products, reported in Other policyholder funds in the Company's Consolidated Balance Sheets.
|
|
(2)
|
Includes U.S. Government and federally sponsored agency obligations for mortgage-backed securities and other mortgage-backed securities.
|
|
(3)
|
Transfers into and out of Level 3 during the years ended December 31, 2019 and 2018 were attributable to changes in the availability of observable market information for individual fixed maturity securities and short-term investments. The Company's policy is to recognize transfers into and transfers out of the levels as having occurred at the end of the reporting period in which the transfers were determined.
|
|
Horace Mann Educators Corporation
|
|
Annual Report on Form 10-K 101
|
|
($ in thousands)
|
|
Carrying
|
|
Fair
|
|
Fair Value Measurements at
Reporting Date Using
|
||||||||||||||
|
|
|
Amount
|
|
Value
|
|
Level 1
|
|
Level 2
|
|
Level 3
|
||||||||||
|
December 31, 2019
|
|
|
|
|
|
|
|
|
|
|
||||||||||
|
Financial Assets
|
|
|
|
|
|
|
|
|
|
|
||||||||||
|
Investments
|
|
|
|
|
|
|
|
|
|
|
||||||||||
|
Other investments
|
|
$
|
163,312
|
|
|
$
|
167,185
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
167,185
|
|
|
Deposit asset on reinsurance
|
|
2,346,166
|
|
|
2,634,012
|
|
|
—
|
|
|
—
|
|
|
2,634,012
|
|
|||||
|
Financial Liabilities
|
|
|
|
|
|
|
|
|
|
|
||||||||||
|
Investment contract and policy reserves,
fixed annuity contracts
|
|
4,675,774
|
|
|
4,609,880
|
|
|
—
|
|
|
—
|
|
|
4,609,880
|
|
|||||
|
Investment contract and life policy reserves,
account values on life contracts
|
|
93,465
|
|
|
98,332
|
|
|
—
|
|
|
—
|
|
|
98,332
|
|
|||||
|
Other policyholder funds
|
|
553,550
|
|
|
553,550
|
|
|
—
|
|
|
495,812
|
|
|
57,738
|
|
|||||
|
Short-term debt
|
|
135,000
|
|
|
135,000
|
|
|
—
|
|
|
—
|
|
|
135,000
|
|
|||||
|
Long-term debt
|
|
298,025
|
|
|
322,678
|
|
|
—
|
|
|
322,678
|
|
|
—
|
|
|||||
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
|
December 31, 2018
|
|
|
|
|
|
|
|
|
|
|
||||||||||
|
Financial Assets
|
|
|
|
|
|
|
|
|
|
|
||||||||||
|
Investments
|
|
|
|
|
|
|
|
|
|
|
||||||||||
|
Other investments
|
|
$
|
156,725
|
|
|
$
|
161,449
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
161,449
|
|
|
Financial Liabilities
|
|
|
|
|
|
|
|
|
|
|
||||||||||
|
Investment contract and policy reserves,
fixed annuity contracts
|
|
4,555,849
|
|
|
4,478,338
|
|
|
—
|
|
|
—
|
|
|
4,478,338
|
|
|||||
|
Investment contract and life policy reserves,
account values on life contracts
|
|
87,229
|
|
|
90,402
|
|
|
—
|
|
|
—
|
|
|
90,402
|
|
|||||
|
Other policyholder funds
|
|
689,287
|
|
|
689,287
|
|
|
—
|
|
|
626,325
|
|
|
62,962
|
|
|||||
|
Long-term debt
|
|
297,740
|
|
|
291,938
|
|
|
—
|
|
|
291,938
|
|
|
—
|
|
|||||
|
102 Annual Report on Form 10-K
|
|
Horace Mann Educators Corporation
|
|
Horace Mann Educators Corporation
|
|
Annual Report on Form 10-K 103
|
|
($ in thousands)
|
|
December 31,
|
||||||
|
|
|
2019
|
|
2018
|
||||
|
Assets
|
|
|
|
|
||||
|
Derivatives, included in Short-term and other investments
|
|
$
|
13,239
|
|
|
$
|
2,647
|
|
|
|
|
|
|
|
||||
|
Liabilities
|
|
|
|
|
||||
|
Fixed indexed annuities - embedded derivatives,
included in Other policyholder funds
|
|
93,733
|
|
|
78,700
|
|
||
|
Indexed universal life - embedded derivatives,
included in Investment contract and policy reserves
|
|
1,314
|
|
|
248
|
|
||
|
($ in thousands)
|
|
Years Ended December 31,
|
||||||||||
|
|
|
2019
|
|
2018
|
|
2017
|
||||||
|
Change in fair value of derivatives: (1)
|
|
|
|
|
|
|
||||||
|
Revenues
|
|
|
|
|
|
|
||||||
|
Net investment gains (losses)
|
|
$
|
9,493
|
|
|
$
|
(4,112
|
)
|
|
$
|
14,867
|
|
|
|
|
|
|
|
|
|
||||||
|
Change in fair value of embedded derivatives:
|
|
|
|
|
|
|
||||||
|
Revenues
|
|
|
|
|
|
|
||||||
|
Net investment gains (losses)
|
|
(13,576
|
)
|
|
7,931
|
|
|
(13,410
|
)
|
|||
|
(1)
|
Includes gains or losses recognized at the expiration of the option term or early termination and the changes in fair value for open options.
|
|
104 Annual Report on Form 10-K
|
|
Horace Mann Educators Corporation
|
|
($ in thousands)
|
|
December 31, 2019
|
|
December 31, 2018
|
||||||||||||||||
|
|
|
Credit Rating
|
|
Notional
|
|
Fair
|
|
Notional
|
|
Fair
|
||||||||||
|
Counterparty
|
|
S&P
|
|
Moody's
|
|
Amount
|
|
Value
|
|
Amount
|
|
Value
|
||||||||
|
Bank of America, N.A.
|
|
A+
|
|
Aa2
|
|
$
|
174,900
|
|
|
$
|
8,523
|
|
|
$
|
144,500
|
|
|
$
|
870
|
|
|
Barclays Bank PLC
|
|
A
|
|
A2
|
|
115,300
|
|
|
3,348
|
|
|
28,500
|
|
|
247
|
|
||||
|
Citigroup Inc.
|
|
BBB+
|
|
A3
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||
|
Credit Suisse International
|
|
A+
|
|
A1
|
|
—
|
|
|
—
|
|
|
16,100
|
|
|
55
|
|
||||
|
Societe Generale
|
|
A
|
|
A1
|
|
27,800
|
|
|
1,369
|
|
|
89,100
|
|
|
1,475
|
|
||||
|
Total
|
|
|
|
|
|
$
|
318,000
|
|
|
$
|
13,240
|
|
|
$
|
278,200
|
|
|
$
|
2,647
|
|
|
Horace Mann Educators Corporation
|
|
Annual Report on Form 10-K 105
|
|
($ in thousands)
|
|
December 31,
2018
|
|
Impairment
|
|
Acquisitions
|
|
December 31,
2019
|
||||||||
|
Property and Casualty
|
|
$
|
9,460
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
9,460
|
|
|
Supplemental
|
|
—
|
|
|
—
|
|
|
19,621
|
|
|
19,621
|
|
||||
|
Retirement
|
|
28,025
|
|
|
(28,025
|
)
|
|
10,087
|
|
|
10,087
|
|
||||
|
Life
|
|
9,911
|
|
|
—
|
|
|
—
|
|
|
9,911
|
|
||||
|
Total
|
|
$
|
47,396
|
|
|
$
|
(28,025
|
)
|
|
$
|
29,708
|
|
|
$
|
49,079
|
|
|
($ in thousands)
|
|
Weighted Average
|
|
|
||
|
|
|
Useful Life (in Years)
|
|
|
||
|
At inception:
|
|
|
|
|
||
|
Value of business acquired
|
|
30
|
|
$
|
94,419
|
|
|
Value of distribution acquired
|
|
17
|
|
53,996
|
|
|
|
Value of agency relationships
|
|
14
|
|
16,981
|
|
|
|
Value of customer relationships
|
|
10
|
|
9,080
|
|
|
|
Total
|
|
23
|
|
174,476
|
|
|
|
Accumulated amortization:
|
|
|
|
|
||
|
Value of business acquired
|
|
|
|
(3,697
|
)
|
|
|
Value of distribution acquired
|
|
|
|
(1,871
|
)
|
|
|
Value of agency relationships
|
|
|
|
(1,489
|
)
|
|
|
Value of customer relationships
|
|
|
|
(1,733
|
)
|
|
|
Total
|
|
|
|
(8,790
|
)
|
|
|
Net intangible assets subject to amortization:
|
|
|
|
$
|
165,686
|
|
|
106 Annual Report on Form 10-K
|
|
Horace Mann Educators Corporation
|
|
($ in thousands)
|
|
|
||
|
Year Ending December 31,
|
|
|
||
|
2020
|
|
$
|
14,488
|
|
|
2021
|
|
13,411
|
|
|
|
2022
|
|
12,433
|
|
|
|
2023
|
|
11,577
|
|
|
|
2024
|
|
10,805
|
|
|
|
Thereafter
|
|
102,972
|
|
|
|
Total
|
|
$
|
165,686
|
|
|
Horace Mann Educators Corporation
|
|
Annual Report on Form 10-K 107
|
|
($ in thousands)
|
|
Years Ended December 31,
|
||||||||||
|
|
|
2019
|
|
2018
|
|
2017
|
||||||
|
Property and Casualty segment
|
|
|
|
|
|
|
||||||
|
Gross reserves, beginning of year (1)
|
|
$
|
367,180
|
|
|
$
|
319,182
|
|
|
$
|
307,757
|
|
|
Less: reinsurance recoverables
|
|
89,725
|
|
|
57,409
|
|
|
61,199
|
|
|||
|
Net reserves, beginning of year (2)
|
|
277,455
|
|
|
261,773
|
|
|
246,558
|
|
|||
|
Incurred claims and claim expenses:
|
|
|
|
|
|
|
||||||
|
Claims occurring in the current year
|
|
483,062
|
|
|
547,959
|
|
|
498,989
|
|
|||
|
Decrease in estimated reserves for claims occurring in prior years (3)
|
|
(7,500
|
)
|
|
(300
|
)
|
|
(2,700
|
)
|
|||
|
Total claims and claim expenses incurred (4)
|
|
475,562
|
|
|
547,659
|
|
|
496,289
|
|
|||
|
Claims and claim expense payments for claims occurring during:
|
|
|
|
|
|
|
||||||
|
Current year
|
|
329,475
|
|
|
369,194
|
|
|
333,385
|
|
|||
|
Prior years
|
|
157,072
|
|
|
162,783
|
|
|
147,689
|
|
|||
|
Total claims and claim expense payments
|
|
486,547
|
|
|
531,977
|
|
|
481,074
|
|
|||
|
Net reserves, end of year (2)
|
|
266,470
|
|
|
277,455
|
|
|
261,773
|
|
|||
|
Plus: reinsurance recoverables
|
|
120,506
|
|
|
89,725
|
|
|
57,409
|
|
|||
|
Gross reserves, end of year (1)
|
|
$
|
386,976
|
|
|
$
|
367,180
|
|
|
$
|
319,182
|
|
|
(1)
|
Unpaid claims and claim expenses as reported in the Consolidated Balance Sheets also include reserves for Supplemental, Retirement and Life of $55.9 million, $29.5 million and $28.6 million as of December 31, 2019, 2018 and 2017, respectively, in addition to Property and Casualty reserves.
|
|
(2)
|
Reserves are net of anticipated reinsurance recoverables.
|
|
(3)
|
Shows the amounts by which the Company 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 refer to the paragraphs below for additional information regarding the reserve development recorded in 2019, 2018 and 2017.
|
|
(4)
|
Benefits, claims and settlement expenses as reported in the Consolidated Statements of Operations also include amounts for Supplemental, Retirement and Life of $109.5 million, $89.9 million, and $86.0 million for the years ended December 31, 2019, 2018 and 2017, respectively, in addition to Property and Casualty amounts.
|
|
108 Annual Report on Form 10-K
|
|
Horace Mann Educators Corporation
|
|
Horace Mann Educators Corporation
|
|
Annual Report on Form 10-K 109
|
|
110 Annual Report on Form 10-K
|
|
Horace Mann Educators Corporation
|
|
Horace Mann Educators Corporation
|
|
Annual Report on Form 10-K 111
|
|
($ in thousands)
|
|||||||||||||||||||||||||||||||||||||||||||||||
|
Auto Liability
|
|
|
|||||||||||||||||||||||||||||||||||||||||||||
|
Incurred Claims and Allocated Claim Adjustment Expense, Net of Reinsurance
|
|
|
|||||||||||||||||||||||||||||||||||||||||||||
|
Years Ended December 31,
|
|
As of December 31, 2019
|
|||||||||||||||||||||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total of Incurred-
But-Not-Reported
Liabilities Plus
Expected Development
on Reported Claims
|
|
Cumulative
Number of Reported Claims |
|||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||||||||
|
Accident
|
|
Unaudited
|
|
Unaudited
|
|
Unaudited
|
|
Unaudited
|
|
Unaudited
|
|
Unaudited
|
|
Unaudited
|
|
Unaudited
|
|
Unaudited
|
|
|
|
|
|||||||||||||||||||||||||
|
Year
|
|
2010
|
|
2011
|
|
2012
|
|
2013
|
|
2014
|
|
2015
|
|
2016
|
|
2017
|
|
2018
|
|
2019
|
|
|
|||||||||||||||||||||||||
|
2010
|
|
$
|
157,712
|
|
|
$
|
160,058
|
|
|
$
|
156,369
|
|
|
$
|
154,222
|
|
|
$
|
152,483
|
|
|
$
|
151,653
|
|
|
$
|
149,818
|
|
|
$
|
149,425
|
|
|
$
|
149,542
|
|
|
$
|
149,481
|
|
|
$
|
—
|
|
|
48,942
|
|
|
2011
|
|
|
|
|
150,803
|
|
|
146,713
|
|
|
145,735
|
|
|
143,133
|
|
|
142,488
|
|
|
139,840
|
|
|
138,891
|
|
|
138,949
|
|
|
138,849
|
|
|
94
|
|
|
45,976
|
|
|||||||||||
|
2012
|
|
|
|
|
|
|
|
156,448
|
|
|
153,815
|
|
|
150,336
|
|
|
149,346
|
|
|
147,594
|
|
|
145,847
|
|
|
145,620
|
|
|
145,515
|
|
|
204
|
|
|
45,984
|
|
|||||||||||
|
2013
|
|
|
|
|
|
|
|
|
|
|
153,860
|
|
|
152,858
|
|
|
150,720
|
|
|
150,657
|
|
|
148,111
|
|
|
147,993
|
|
|
148,135
|
|
|
575
|
|
|
47,369
|
|
|||||||||||
|
2014
|
|
|
|
|
|
|
|
|
|
|
|
|
|
155,105
|
|
|
157,249
|
|
|
158,470
|
|
|
159,937
|
|
|
159,794
|
|
|
159,355
|
|
|
665
|
|
|
49,386
|
|
|||||||||||
|
2015
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
165,517
|
|
|
172,553
|
|
|
177,021
|
|
|
178,325
|
|
|
178,654
|
|
|
1,850
|
|
|
50,618
|
|
|||||||||||
|
2016
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
180,380
|
|
|
184,440
|
|
|
184,567
|
|
|
186,568
|
|
|
2,649
|
|
|
51,995
|
|
|||||||||||
|
2017
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
187,983
|
|
|
188,756
|
|
|
188,625
|
|
|
8,025
|
|
|
48,906
|
|
|||||||||||
|
2018
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
200,314
|
|
|
195,284
|
|
|
26,931
|
|
|
47,078
|
|
|||||||||||
|
2019
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
181,141
|
|
|
64,778
|
|
|
42,587
|
|
|||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
$
|
1,671,607
|
|
|
|
|
|
|
|
|||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||||||
|
($ in thousands)
|
|
|
|
|
|||||||||||||||||||||||||||||||||||||||||||
|
Auto Liability
|
|
|
|
|
|||||||||||||||||||||||||||||||||||||||||||
|
Cumulative Paid Claims and Allocated Claim Adjustment Expense, Net of Reinsurance
|
|
|
|
|
|||||||||||||||||||||||||||||||||||||||||||
|
Years Ended December 31,
|
|
|
|
|
|||||||||||||||||||||||||||||||||||||||||||
|
Accident
|
|
Unaudited
|
|
Unaudited
|
|
Unaudited
|
|
Unaudited
|
|
Unaudited
|
|
Unaudited
|
|
Unaudited
|
|
Unaudited
|
|
Unaudited
|
|
|
|
|
|
|
|||||||||||||||||||||||
|
Year
|
|
2010
|
|
2011
|
|
2012
|
|
2013
|
|
2014
|
|
2015
|
|
2016
|
|
2017
|
|
2018
|
|
2019
|
|
|
|
|
|||||||||||||||||||||||
|
2010
|
|
$
|
63,416
|
|
|
$
|
118,345
|
|
|
$
|
137,012
|
|
|
$
|
144,255
|
|
|
$
|
147,337
|
|
|
$
|
148,751
|
|
|
$
|
149,247
|
|
|
$
|
149,364
|
|
|
$
|
149,439
|
|
|
$
|
149,474
|
|
|
|
|
|
|||
|
2011
|
|
|
|
|
61,070
|
|
|
108,837
|
|
|
126,812
|
|
|
133,931
|
|
|
136,906
|
|
|
138,151
|
|
|
138,358
|
|
|
138,689
|
|
|
138,692
|
|
|
|
|
|
|||||||||||||
|
2012
|
|
|
|
|
|
|
|
61,279
|
|
|
109,574
|
|
|
127,185
|
|
|
138,641
|
|
|
142,916
|
|
|
144,622
|
|
|
145,121
|
|
|
145,184
|
|
|
|
|
|
|||||||||||||
|
2013
|
|
|
|
|
|
|
|
|
|
|
62,224
|
|
|
108,856
|
|
|
131,214
|
|
|
139,954
|
|
|
145,291
|
|
|
146,770
|
|
|
147,409
|
|
|
|
|
|
|||||||||||||
|
2014
|
|
|
|
|
|
|
|
|
|
|
|
|
|
61,329
|
|
|
117,468
|
|
|
139,463
|
|
|
149,059
|
|
|
155,758
|
|
|
157,596
|
|
|
|
|
|
|||||||||||||
|
2015
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
70,836
|
|
|
134,473
|
|
|
157,980
|
|
|
170,088
|
|
|
174,495
|
|
|
|
|
|
|||||||||||||
|
2016
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
73,073
|
|
|
140,901
|
|
|
166,815
|
|
|
177,834
|
|
|
|
|
|
|||||||||||||
|
2017
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
70,682
|
|
|
139,531
|
|
|
166,614
|
|
|
|
|
|
|||||||||||||
|
2018
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
77,528
|
|
|
141,537
|
|
|
|
|
|
|||||||||||||
|
2019
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
69,665
|
|
|
|
|
|
|||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
1,468,500
|
|
|
|
|
|
|||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Outstanding prior to 2010
|
|
73
|
|
|
|
|
|
|||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Prior years paid
|
|
(219
|
)
|
|
|
|
|
||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Liabilities for claims and claim adjustment expenses, net of reinsurance
|
|
$
|
203,180
|
|
|
|
|
|
||||||||||||||||||||||||
|
112 Annual Report on Form 10-K
|
|
Horace Mann Educators Corporation
|
|
($ in thousands)
|
|||||||||||||||||||||||||||||||||||||||||||||||
|
Auto Physical Damage
|
|
|
|||||||||||||||||||||||||||||||||||||||||||||
|
Incurred Claims and Allocated Claim Adjustment Expense, Net of Reinsurance
|
|
|
|||||||||||||||||||||||||||||||||||||||||||||
|
Years Ended December 31,
|
|
As of December 31, 2019
|
|||||||||||||||||||||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total of Incurred-
But-Not-Reported
Liabilities Plus
Expected Development
on Reported Claims
|
|
Cumulative
Number of Reported Claims |
|||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||||||||
|
Accident
|
|
Unaudited
|
|
Unaudited
|
|
Unaudited
|
|
Unaudited
|
|
Unaudited
|
|
Unaudited
|
|
Unaudited
|
|
Unaudited
|
|
Unaudited
|
|
|
|
|
|||||||||||||||||||||||||
|
Year
|
|
2010
|
|
2011
|
|
2012
|
|
2013
|
|
2014
|
|
2015
|
|
2016
|
|
2017
|
|
2018
|
|
2019
|
|
|
|||||||||||||||||||||||||
|
2010
|
|
$
|
84,112
|
|
|
$
|
83,420
|
|
|
$
|
83,103
|
|
|
$
|
83,046
|
|
|
$
|
83,052
|
|
|
$
|
83,050
|
|
|
$
|
83,036
|
|
|
$
|
83,028
|
|
|
$
|
83,018
|
|
|
$
|
83,011
|
|
|
$
|
—
|
|
|
81,581
|
|
|
2011
|
|
|
|
|
86,205
|
|
|
85,507
|
|
|
86,023
|
|
|
85,120
|
|
|
85,143
|
|
|
85,116
|
|
|
85,108
|
|
|
85,102
|
|
|
85,090
|
|
|
—
|
|
|
80,804
|
|
|||||||||||
|
2012
|
|
|
|
|
|
|
|
83,770
|
|
|
82,337
|
|
|
83,402
|
|
|
83,431
|
|
|
83,354
|
|
|
83,342
|
|
|
83,334
|
|
|
83,322
|
|
|
—
|
|
|
78,165
|
|
|||||||||||
|
2013
|
|
|
|
|
|
|
|
|
|
|
91,448
|
|
|
88,856
|
|
|
88,672
|
|
|
88,627
|
|
|
88,455
|
|
|
88,525
|
|
|
88,457
|
|
|
—
|
|
|
80,920
|
|
|||||||||||
|
2014
|
|
|
|
|
|
|
|
|
|
|
|
|
|
95,572
|
|
|
95,634
|
|
|
95,422
|
|
|
95,239
|
|
|
95,232
|
|
|
95,241
|
|
|
—
|
|
|
87,901
|
|
|||||||||||
|
2015
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
99,291
|
|
|
97,994
|
|
|
97,624
|
|
|
97,455
|
|
|
97,612
|
|
|
(18
|
)
|
|
87,497
|
|
|||||||||||
|
2016
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
112,430
|
|
|
109,515
|
|
|
109,348
|
|
|
109,603
|
|
|
(17
|
)
|
|
93,225
|
|
|||||||||||
|
2017
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
115,483
|
|
|
111,798
|
|
|
110,520
|
|
|
(161
|
)
|
|
91,270
|
|
|||||||||||
|
2018
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
109,040
|
|
|
108,886
|
|
|
(326
|
)
|
|
94,388
|
|
|||||||||||
|
2019
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
111,577
|
|
|
(6,829
|
)
|
|
89,207
|
|
|||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
$
|
973,319
|
|
|
|
|
|
|
|
|||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||||||
|
($ in thousands)
|
|
|
|
|
|||||||||||||||||||||||||||||||||||||||||||
|
Auto Physical Damage
|
|
|
|
|
|||||||||||||||||||||||||||||||||||||||||||
|
Cumulative Paid Claims and Allocated Claim Adjustment Expense, Net of Reinsurance
|
|
|
|
|
|||||||||||||||||||||||||||||||||||||||||||
|
Years Ended December 31,
|
|
|
|
|
|||||||||||||||||||||||||||||||||||||||||||
|
Accident
|
|
Unaudited
|
|
Unaudited
|
|
Unaudited
|
|
Unaudited
|
|
Unaudited
|
|
Unaudited
|
|
Unaudited
|
|
Unaudited
|
|
Unaudited
|
|
|
|
|
|
|
|||||||||||||||||||||||
|
Year
|
|
2010
|
|
2011
|
|
2012
|
|
2013
|
|
2014
|
|
2015
|
|
2016
|
|
2017
|
|
2018
|
|
2019
|
|
|
|
|
|||||||||||||||||||||||
|
2010
|
|
$
|
79,329
|
|
|
$
|
83,120
|
|
|
$
|
83,103
|
|
|
$
|
83,087
|
|
|
$
|
83,067
|
|
|
$
|
83,051
|
|
|
$
|
83,036
|
|
|
$
|
83,028
|
|
|
$
|
83,015
|
|
|
$
|
83,009
|
|
|
|
|
|
|||
|
2011
|
|
|
|
|
83,227
|
|
|
85,254
|
|
|
85,181
|
|
|
85,148
|
|
|
85,127
|
|
|
85,116
|
|
|
85,108
|
|
|
85,095
|
|
|
85,090
|
|
|
|
|
|
|||||||||||||
|
2012
|
|
|
|
|
|
|
80,519
|
|
|
83,418
|
|
|
83,372
|
|
|
83,355
|
|
|
83,347
|
|
|
83,342
|
|
|
83,326
|
|
|
83,322
|
|
|
|
|
|
||||||||||||||
|
2013
|
|
|
|
|
|
|
|
|
85,110
|
|
|
88,688
|
|
|
88,580
|
|
|
88,532
|
|
|
88,484
|
|
|
88,471
|
|
|
88,452
|
|
|
|
|
|
|||||||||||||||
|
2014
|
|
|
|
|
|
|
|
|
|
|
88,939
|
|
|
95,444
|
|
|
95,266
|
|
|
95,256
|
|
|
95,258
|
|
|
95,243
|
|
|
|
|
|
||||||||||||||||
|
2015
|
|
|
|
|
|
|
|
|
|
|
|
|
92,138
|
|
|
97,850
|
|
|
97,685
|
|
|
97,638
|
|
|
97,625
|
|
|
|
|
|
|||||||||||||||||
|
2016
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
106,459
|
|
|
109,686
|
|
|
109,536
|
|
|
109,611
|
|
|
|
|
|
||||||||||||||||||
|
2017
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
105,156
|
|
|
110,817
|
|
|
110,674
|
|
|
|
|
|
|||||||||||||||||||
|
2018
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
103,559
|
|
|
109,103
|
|
|
|
|
|
||||||||||||||||||||
|
2019
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
106,243
|
|
|
|
|
|
|||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
968,372
|
|
|
|
|
|
|||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Outstanding prior to 2010
|
|
—
|
|
|
|
|
|
|||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Prior years paid
|
|
—
|
|
|
|
|
|
|||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Liabilities for claims and claim adjustment expenses, net of reinsurance
|
|
$
|
4,947
|
|
|
|
|
|
||||||||||||||||||||||||
|
Horace Mann Educators Corporation
|
|
Annual Report on Form 10-K 113
|
|
($ in thousands)
|
|
Years Ended December 31,
|
||
|
|
|
2019
|
||
|
Property and Casualty segment
|
|
|
||
|
Net reserves
|
|
|
||
|
Homeowners
|
|
$
|
35,480
|
|
|
Auto liability
|
|
203,180
|
|
|
|
Auto physical damage
|
|
4,947
|
|
|
|
Other short duration lines
|
|
2,892
|
|
|
|
Total net reserves for unpaid claims and claim adjustment expense,
net of reinsurance
|
|
246,499
|
|
|
|
|
|
|
||
|
Reinsurance recoverable on unpaid claims
|
|
|
||
|
Homeowners
|
|
12,394
|
|
|
|
Auto liability
|
|
100,866
|
|
|
|
Other short duration lines
|
|
7,246
|
|
|
|
Total reinsurance recoverable on unpaid claims
|
|
120,506
|
|
|
|
|
|
|
||
|
Insurance lines other than short duration (1)
|
|
55,878
|
|
|
|
Unallocated claims adjustment expenses
|
|
19,971
|
|
|
|
Total other than short duration and unallocated claims adjustment expenses
|
|
75,849
|
|
|
|
|
|
|
||
|
Gross reserves, end of year (1)
|
|
$
|
442,854
|
|
|
(1)
|
This line includes Supplemental, Retirement and Life reserves as included in the Consolidated Balance Sheet.
|
|
114 Annual Report on Form 10-K
|
|
Horace Mann Educators Corporation
|
|
($ in thousands)
|
|
December 31,
|
||||||
|
|
|
2019
|
|
2018
|
||||
|
Reinsurance recoverables on reserves and unpaid claims
|
|
|
|
|
||||
|
Property and Casualty
|
|
|
|
|
||||
|
Reinsurance companies
|
|
$
|
19,640
|
|
|
$
|
33,754
|
|
|
State insurance facilities
|
|
100,866
|
|
|
55,971
|
|
||
|
Life and health
|
|
8,707
|
|
|
9,785
|
|
||
|
Total
|
|
$
|
129,213
|
|
|
$
|
99,510
|
|
|
($ in thousands)
|
|
Gross
Amount
|
|
Ceded to
Other
Companies(1)
|
|
Assumed
from Other
Companies
|
|
Net
Amount
|
||||||||
|
Year Ended December 31, 2019
|
|
|
|
|
|
|
|
|
||||||||
|
Premiums written and contract deposits (2)
|
|
$
|
1,337,847
|
|
|
$
|
23,872
|
|
|
$
|
10,567
|
|
|
$
|
1,324,542
|
|
|
Premiums and contract charges earned
|
|
917,610
|
|
|
30,412
|
|
|
10,756
|
|
|
897,954
|
|
||||
|
Benefits, claims and settlement expenses
|
|
633,874
|
|
|
56,325
|
|
|
7,519
|
|
|
585,068
|
|
||||
|
|
|
|
|
|
|
|
|
|
||||||||
|
Year Ended December 31, 2018
|
|
|
|
|
|
|
|
|
||||||||
|
Premiums written and contract deposits (2)
|
|
1,255,557
|
|
|
28,773
|
|
|
8,259
|
|
|
1,235,043
|
|
||||
|
Premiums and contract charges earned
|
|
841,147
|
|
|
28,837
|
|
|
5,023
|
|
|
817,333
|
|
||||
|
Benefits, claims and settlement expenses
|
|
769,664
|
|
|
136,601
|
|
|
4,497
|
|
|
637,560
|
|
||||
|
|
|
|
|
|
|
|
|
|
||||||||
|
Year Ended December 31, 2017
|
|
|
|
|
|
|
|
|
||||||||
|
Premiums written and contract deposits (2)
|
|
1,244,500
|
|
|
21,989
|
|
|
4,606
|
|
|
1,227,117
|
|
||||
|
Premiums and contract charges earned
|
|
812,099
|
|
|
22,036
|
|
|
4,640
|
|
|
794,703
|
|
||||
|
Benefits, claims and settlement expenses
|
|
588,621
|
|
|
10,472
|
|
|
4,157
|
|
|
582,306
|
|
||||
|
(1)
|
Excludes the annuity reinsurance agreement accounted for under the deposit method that is discussed in Note 6.
|
|
(2)
|
This measure is not based on accounting principles generally accepted in the U.S. (non-GAAP). An explanation of this non-GAAP measure is contained in the Glossary of Selected Terms included as an exhibit in the Company's reports filed with the SEC.
|
|
Horace Mann Educators Corporation
|
|
Annual Report on Form 10-K 115
|
|
($ in thousands)
|
|
Effective
Interest
Rates
|
|
Final
Maturity
|
|
December 31,
|
||||||
|
|
|
|
|
2019
|
|
2018
|
||||||
|
Short-term debt
|
|
|
|
|
|
|
|
|
||||
|
Bank Credit Facility
|
|
Variable
|
|
2024
|
|
$
|
135,000
|
|
|
$
|
—
|
|
|
Long-term debt (1)
|
|
|
|
|
|
|
|
|
||||
|
4.50% Senior Notes, Aggregate principal amount of
$250,000 less unaccrued discount of $426 and
$488 and unamortized debt issuance costs
of $1,549 and $1,772
|
|
4.50%
|
|
2025
|
|
248,025
|
|
|
247,740
|
|
||
|
Federal Home Loan Bank borrowing
|
|
1.99%
|
|
2022
|
|
50,000
|
|
|
50,000
|
|
||
|
Total
|
|
|
|
|
|
$
|
433,025
|
|
|
$
|
297,740
|
|
|
(1)
|
The Company designates debt obligations as "long-term" based on maturity date at issuance.
|
|
116 Annual Report on Form 10-K
|
|
Horace Mann Educators Corporation
|
|
($ in thousands)
|
|
December 31,
|
||||||
|
|
|
2019
|
|
2018
|
||||
|
Income tax (asset) liability
|
|
|
|
|
||||
|
Current
|
|
$
|
(12,184
|
)
|
|
$
|
(20,793
|
)
|
|
Deferred
|
|
160,624
|
|
|
103,686
|
|
||
|
Horace Mann Educators Corporation
|
|
Annual Report on Form 10-K 117
|
|
($ in thousands)
|
|
December 31,
|
||||||
|
|
|
2019
|
|
2018
|
||||
|
Deferred tax assets
|
|
|
|
|
|
|
||
|
Unearned premium reserve reduction
|
|
$
|
12,103
|
|
|
$
|
12,112
|
|
|
Compensation accruals
|
|
8,866
|
|
|
6,866
|
|
||
|
Reinsurance commissions
|
|
6,804
|
|
|
—
|
|
||
|
Impaired securities
|
|
1,245
|
|
|
1,295
|
|
||
|
Other comprehensive income - net funded status of benefit plans
|
|
2,875
|
|
|
3,254
|
|
||
|
Discounting of unpaid claims and claim expense tax reserves
|
|
2,530
|
|
|
2,772
|
|
||
|
Postretirement benefits other than pensions
|
|
285
|
|
|
302
|
|
||
|
Charitable contributions carryforwards
|
|
—
|
|
|
89
|
|
||
|
Net operating loss carryforwards
|
|
3,803
|
|
|
10,969
|
|
||
|
Total gross deferred tax assets
|
|
38,511
|
|
|
37,659
|
|
||
|
Deferred tax liabilities
|
|
|
|
|
|
|
||
|
Other comprehensive income - net unrealized gains on securities
|
|
74,645
|
|
|
32,897
|
|
||
|
Deferred policy acquisition costs
|
|
49,326
|
|
|
60,330
|
|
||
|
Life insurance future policy benefit reserve
|
|
38,210
|
|
|
9,304
|
|
||
|
Life insurance future policy benefit reserve (transitional rule)
|
|
12,786
|
|
|
14,910
|
|
||
|
Discounting of unpaid claims and claim expense tax reserves
(transitional rule)
|
|
947
|
|
|
1,203
|
|
||
|
Investment related adjustments
|
|
15,718
|
|
|
17,531
|
|
||
|
Intangibles
|
|
2,021
|
|
|
2,557
|
|
||
|
Other, net
|
|
5,482
|
|
|
2,613
|
|
||
|
Total gross deferred tax liabilities
|
|
199,135
|
|
|
141,345
|
|
||
|
Net deferred tax liability
|
|
$
|
160,624
|
|
|
$
|
103,686
|
|
|
($ in thousands)
|
|
Pretax Amount
|
|
Expiration Year
|
||
|
Operating loss carryforwards
|
|
$
|
12,711
|
|
|
2038
|
|
Operating loss carryforwards
|
|
5,397
|
|
|
Indefinite
|
|
|
($ in thousands)
|
|
Years Ended December 31,
|
||||||||||
|
|
|
2019
|
|
2018
|
|
2017
|
||||||
|
Current
|
|
$
|
31,518
|
|
|
$
|
4,152
|
|
|
$
|
3,813
|
|
|
Deferred
|
|
20,488
|
|
|
(2,958
|
)
|
|
(84,585
|
)
|
|||
|
Total income tax expense (benefit)
|
|
$
|
52,006
|
|
|
$
|
1,194
|
|
|
$
|
(80,772
|
)
|
|
118 Annual Report on Form 10-K
|
|
Horace Mann Educators Corporation
|
|
($ in thousands)
|
|
Years Ended December 31,
|
||||||||||
|
|
|
2019
|
|
2018
|
|
2017
|
||||||
|
Expected federal tax on income
|
|
$
|
49,654
|
|
|
$
|
4,103
|
|
|
$
|
31,041
|
|
|
Add (deduct) tax effects of:
|
|
|
|
|
|
|
||||||
|
Tax-exempt interest
|
|
(4,159
|
)
|
|
(3,726
|
)
|
|
(5,335
|
)
|
|||
|
Dividend received deduction
|
|
(1,392
|
)
|
|
(412
|
)
|
|
(4,810
|
)
|
|||
|
Goodwill impairment
|
|
5,885
|
|
|
—
|
|
|
—
|
|
|||
|
Tax Act DTL re-measurement
|
|
—
|
|
|
—
|
|
|
(98,988
|
)
|
|||
|
Employee share-based compensation
|
|
272
|
|
|
(1,134
|
)
|
|
(3,258
|
)
|
|||
|
Compensation deduction limitation
|
|
680
|
|
|
1,754
|
|
|
326
|
|
|||
|
Prior year adjustments
|
|
(716
|
)
|
|
300
|
|
|
(293
|
)
|
|||
|
Other, net
|
|
1,782
|
|
|
309
|
|
|
545
|
|
|||
|
Income tax expense (benefit) provided on income
|
|
$
|
52,006
|
|
|
$
|
1,194
|
|
|
$
|
(80,772
|
)
|
|
Horace Mann Educators Corporation
|
|
Annual Report on Form 10-K 119
|
|
($ in thousands)
|
|
Years Ended December 31,
|
||||||||||
|
|
|
2019
|
|
2018
|
|
2017
|
||||||
|
Balance as of the beginning of the year
|
|
$
|
1,734
|
|
|
$
|
1,790
|
|
|
$
|
1,594
|
|
|
Increases related to prior year tax positions
|
|
109
|
|
|
—
|
|
|
101
|
|
|||
|
Decreases related to prior year tax positions
|
|
—
|
|
|
(152
|
)
|
|
—
|
|
|||
|
Increases related to current year tax positions
|
|
123
|
|
|
96
|
|
|
422
|
|
|||
|
Settlements
|
|
—
|
|
|
—
|
|
|
—
|
|
|||
|
Lapse of statute
|
|
—
|
|
|
—
|
|
|
(327
|
)
|
|||
|
Balance as of the end of the year
|
|
$
|
1,966
|
|
|
$
|
1,734
|
|
|
$
|
1,790
|
|
|
($ in thousands)
|
|
Year Ended
|
||
|
|
|
December 31, 2019
|
||
|
Operating lease cost
|
|
$
|
3,841
|
|
|
Short-term lease cost
|
|
208
|
|
|
|
Total lease cost
|
|
$
|
4,049
|
|
|
($ in thousands)
|
|
Year Ended
|
||
|
|
|
December 31, 2019
|
||
|
Cash paid for amounts included in the measurement of lease liabilities
|
|
$
|
3,447
|
|
|
($ in thousands, except lease term and discount rate)
|
|
December 31, 2019
|
||
|
Assets
|
|
|
||
|
Right of use assets, included in Other assets
|
|
$
|
16,483
|
|
|
Liabilities
|
|
|
||
|
Operating lease liabilities, included in Other liabilities
|
|
$
|
17,499
|
|
|
|
|
|
||
|
Weighted average remaining lease term
|
|
4.51
|
|
|
|
Weighted average discount rate
|
|
3.78
|
%
|
|
|
120 Annual Report on Form 10-K
|
|
Horace Mann Educators Corporation
|
|
($ in thousands)
|
|
|
||
|
Year Ending December 31,
|
|
|
||
|
2020
|
|
$
|
4,440
|
|
|
2021
|
|
4,285
|
|
|
|
2022
|
|
4,156
|
|
|
|
2023
|
|
3,459
|
|
|
|
2024
|
|
1,929
|
|
|
|
Thereafter
|
|
787
|
|
|
|
Total future minimum lease payments
|
|
19,056
|
|
|
|
Less imputed interest
|
|
(1,557
|
)
|
|
|
Total
|
|
$
|
17,499
|
|
|
Horace Mann Educators Corporation
|
|
Annual Report on Form 10-K 121
|
|
|
|
December 31,
|
|||||||
|
|
|
2019
|
|
2018
|
|
2017
|
|||
|
CSUs related to deferred compensation for Directors
|
|
28,526
|
|
|
32,288
|
|
|
61,677
|
|
|
CSUs related to deferred compensation for employees
|
|
25,194
|
|
|
24,498
|
|
|
24,903
|
|
|
Stock options
|
|
908,557
|
|
|
774,821
|
|
|
719,015
|
|
|
RSUs related to incentive compensation
|
|
889,438
|
|
|
1,008,249
|
|
|
1,149,679
|
|
|
Total
|
|
1,851,715
|
|
|
1,839,856
|
|
|
1,955,274
|
|
|
|
|
Weighted Average
Option Price
per Share
|
|
Range of
Option Prices
per Share
|
|
Options
|
||||
|
|
|
|
|
Outstanding
|
|
Vested and
Exercisable
|
||||
|
December 31, 2018
|
|
$36.65
|
|
$17.32-$44.75
|
|
774,821
|
|
|
271,116
|
|
|
|
|
|
|
|
|
|
|
|
||
|
Granted
|
|
$39.22
|
|
$38.99-$42.73
|
|
282,040
|
|
|
—
|
|
|
Vested
|
|
$34.46
|
|
$20.60-$44.75
|
|
—
|
|
|
161,679
|
|
|
Exercised
|
|
$26.98
|
|
$17.32-$42.95
|
|
(64,095
|
)
|
|
(64,095
|
)
|
|
Forfeited
|
|
$39.97
|
|
$31.01-$44.75
|
|
(84,209
|
)
|
|
—
|
|
|
Expired
|
|
—
|
|
—
|
|
—
|
|
|
—
|
|
|
December 31, 2019
|
|
$37.82
|
|
$20.60-$44.75
|
|
908,557
|
|
|
368,700
|
|
|
122 Annual Report on Form 10-K
|
|
Horace Mann Educators Corporation
|
|
|
||||||||||||||||
|
|
|
December 31, 2019
|
||||||||||||||
|
|
|
|
|
Total Outstanding Options
|
|
Vested and Exercisable Options
|
||||||||||
|
|
|
Range of
Option Prices
per Share
|
|
Options
|
|
Weighted
Average
Option Price
per Share
|
|
Weighted
Average
Remaining
Term
|
|
Options
|
|
Weighted
Average
Option Price
per Share
|
|
Weighted
Average
Remaining
Term
|
||
|
|
|
$20.60-$22.69
|
|
11,100
|
|
|
$22.34
|
|
0.36
|
|
11,100
|
|
|
$22.34
|
|
0.36 years
|
|
|
|
$28.88-$32.35
|
|
271,579
|
|
|
$30.94
|
|
5.65
|
|
222,499
|
|
|
$30.92
|
|
5.53 years
|
|
|
|
$38.05-$41.95
|
|
415,356
|
|
|
$40.14
|
|
8.36
|
|
85,766
|
|
|
$41.80
|
|
7.19 years
|
|
|
|
$42.95-$44.75
|
|
210,522
|
|
|
$42.94
|
|
8.30
|
|
49,335
|
|
|
$43.00
|
|
8.19 years
|
|
Total
|
|
|
|
908,557
|
|
|
$37.82
|
|
7.44
|
|
368,700
|
|
|
$34.81
|
|
6.11 years
|
|
|
|
Total Outstanding Units
|
|
Vested Units
|
||||||
|
|
|
Units
|
|
Weighted Average
Grant Date Fair
Value per Unit
|
|
Units
|
|
Weighted Average
Grant Date Fair
Value per Unit
|
||
|
December 31, 2018
|
|
1,008,249
|
|
|
$35.64
|
|
417,179
|
|
|
$20.22
|
|
|
|
|
|
|
|
|
|
|
||
|
Granted (1)
|
|
210,712
|
|
|
$41.52
|
|
—
|
|
|
—
|
|
Adjustment for performance achievement
|
|
(3,789
|
)
|
|
$32.16
|
|
—
|
|
|
—
|
|
Vested
|
|
—
|
|
|
—
|
|
417,454
|
|
|
$33.93
|
|
Forfeited
|
|
(34,895
|
)
|
|
$43.08
|
|
—
|
|
|
—
|
|
Distributed (2)
|
|
(290,839
|
)
|
|
$31.39
|
|
(290,839
|
)
|
|
$31.39
|
|
|
|
|
|
|
|
|
|
|
||
|
December 31, 2019
|
|
889,438
|
|
|
$31.94
|
|
543,794
|
|
|
$24.77
|
|
(1)
|
Includes dividends reinvested into additional RSUs.
|
|
(2)
|
Includes distributed units which were utilized to satisfy withholding taxes due on the distribution.
|
|
Horace Mann Educators Corporation
|
|
Annual Report on Form 10-K 123
|
|
($ in thousands)
|
|
December 31,
|
||||||
|
|
|
2019
|
|
2018
|
||||
|
Statutory capital and surplus of insurance subsidiaries
|
|
$
|
868,839
|
|
|
$
|
903,564
|
|
|
Increase (decrease) due to:
|
|
|
|
|
||||
|
Deferred policy acquisition costs
|
|
276,668
|
|
|
298,742
|
|
||
|
Deposit asset on reinsurance
|
|
2,346,166
|
|
|
—
|
|
||
|
Annuity reserves ceded
|
|
(2,239,717
|
)
|
|
—
|
|
||
|
Difference in policyholder reserves
|
|
209,127
|
|
|
142,601
|
|
||
|
Goodwill
|
|
49,079
|
|
|
47,396
|
|
||
|
Intangible assets, net
|
|
177,217
|
|
|
—
|
|
||
|
Investment fair value adjustments on fixed maturity securities
|
|
397,762
|
|
|
142,512
|
|
||
|
Difference in investment reserves
|
|
102,380
|
|
|
105,430
|
|
||
|
Federal income tax liability
|
|
(178,026
|
)
|
|
(115,667
|
)
|
||
|
Net funded status of benefit plans
|
|
(13,690
|
)
|
|
(15,495
|
)
|
||
|
Non-admitted assets and other, net
|
|
(53,801
|
)
|
|
20,412
|
|
||
|
Shareholders' equity of parent company and
non-insurance subsidiaries
|
|
8,306
|
|
|
8,795
|
|
||
|
Parent company short-term and long-term debt
|
|
(383,025
|
)
|
|
(247,740
|
)
|
||
|
Shareholders' equity as reported herein
|
|
$
|
1,567,285
|
|
|
$
|
1,290,550
|
|
|
($ in thousands)
|
|
Years Ended December 31,
|
||||||||||
|
|
|
2019
|
|
2018
|
|
2017
|
||||||
|
Statutory net income of insurance subsidiaries
|
|
$
|
62,316
|
|
|
$
|
45,977
|
|
|
$
|
82,587
|
|
|
Net loss of non-insurance companies
|
|
(9,537
|
)
|
|
(9,755
|
)
|
|
(4,496
|
)
|
|||
|
Interest expense
|
|
(14,272
|
)
|
|
(11,892
|
)
|
|
(11,836
|
)
|
|||
|
Tax benefit of interest expense and other
parent company current tax adjustments
|
|
8,993
|
|
|
121
|
|
|
5,654
|
|
|||
|
Combined net income
|
|
47,500
|
|
|
24,451
|
|
|
71,909
|
|
|||
|
Increase (decrease) due to:
|
|
|
|
|
|
|
||||||
|
Deferred policy acquisition costs
|
|
2,101
|
|
|
1,015
|
|
|
9,385
|
|
|||
|
Intangible asset amortization expense
|
|
(8,790
|
)
|
|
—
|
|
|
—
|
|
|||
|
Policyholder benefits
|
|
117,369
|
|
|
26,318
|
|
|
30,609
|
|
|||
|
Federal income tax (expense) benefit
|
|
(23,492
|
)
|
|
3,020
|
|
|
84,198
|
|
|||
|
Investment reserves
|
|
88,627
|
|
|
(31,529
|
)
|
|
(20,966
|
)
|
|||
|
Other adjustments, net
|
|
(38,872
|
)
|
|
(4,932
|
)
|
|
(5,676
|
)
|
|||
|
Net income as reported herein
|
|
$
|
184,443
|
|
|
$
|
18,343
|
|
|
$
|
169,459
|
|
|
124 Annual Report on Form 10-K
|
|
Horace Mann Educators Corporation
|
|
Horace Mann Educators Corporation
|
|
Annual Report on Form 10-K 125
|
|
($ in thousands)
|
|
Year Ended December 31,
|
||||||||||
|
|
|
2019
|
|
2018
|
|
2017
|
||||||
|
401(k) plan
|
|
|
|
|
|
|
||||||
|
Contributions to employees' accounts
|
|
$
|
8,233
|
|
|
$
|
7,655
|
|
|
$
|
7,637
|
|
|
Total assets at the end of the year
|
|
206,247
|
|
|
167,767
|
|
|
180,514
|
|
|||
|
|
|
|
|
|
|
|
||||||
|
Non-qualified defined contribution plan
|
|
|
|
|
|
|
||||||
|
Contributions to employees' accounts
|
|
58
|
|
|
70
|
|
|
84
|
|
|||
|
Total assets at the end of the year
|
|
—
|
|
|
—
|
|
|
—
|
|
|||
|
126 Annual Report on Form 10-K
|
|
Horace Mann Educators Corporation
|
|
($ in thousands)
|
|
Defined Benefit Plan
|
|
Supplemental
Defined Benefit Plans
|
||||||||||||||||||||
|
|
|
December 31,
|
|
December 31,
|
||||||||||||||||||||
|
|
|
2019
|
|
2018
|
|
2017
|
|
2019
|
|
2018
|
|
2017
|
||||||||||||
|
Change in benefit obligation:
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
|
Projected benefit obligation
at beginning of year
|
|
$
|
25,075
|
|
|
$
|
28,432
|
|
|
$
|
29,407
|
|
|
$
|
15,404
|
|
|
$
|
16,832
|
|
|
$
|
16,847
|
|
|
Service cost
|
|
650
|
|
|
650
|
|
|
650
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||||
|
Interest cost
|
|
997
|
|
|
947
|
|
|
1,091
|
|
|
620
|
|
|
566
|
|
|
631
|
|
||||||
|
Plan amendments
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||||
|
Actuarial loss (gain)
|
|
101
|
|
|
(2,208
|
)
|
|
(721
|
)
|
|
516
|
|
|
(789
|
)
|
|
805
|
|
||||||
|
Benefits paid
|
|
(2,003
|
)
|
|
(2,746
|
)
|
|
(1,995
|
)
|
|
(1,312
|
)
|
|
(1,205
|
)
|
|
(1,451
|
)
|
||||||
|
Settlements
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||||
|
Projected benefit obligation at end of year
|
|
$
|
24,820
|
|
|
$
|
25,075
|
|
|
$
|
28,432
|
|
|
$
|
15,228
|
|
|
$
|
15,404
|
|
|
$
|
16,832
|
|
|
Change in plan assets:
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
|
Fair value of plan assets
at beginning of year
|
|
$
|
22,090
|
|
|
$
|
25,843
|
|
|
$
|
25,446
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
Actual return on plan assets
|
|
3,471
|
|
|
(640
|
)
|
|
2,909
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||||
|
Employer contributions
|
|
—
|
|
|
—
|
|
|
—
|
|
|
1,312
|
|
|
1,205
|
|
|
1,451
|
|
||||||
|
Benefits paid
|
|
(2,003
|
)
|
|
(2,746
|
)
|
|
(1,995
|
)
|
|
(1,312
|
)
|
|
(1,205
|
)
|
|
(1,451
|
)
|
||||||
|
Expenses paid
|
|
(394
|
)
|
|
(367
|
)
|
|
(517
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
||||||
|
Settlements
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||||
|
Fair value of plan assets at end of year
|
|
$
|
23,164
|
|
|
$
|
22,090
|
|
|
$
|
25,843
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
Funded status
|
|
$
|
(1,656
|
)
|
|
$
|
(2,985
|
)
|
|
$
|
(2,589
|
)
|
|
$
|
(15,228
|
)
|
|
$
|
(15,404
|
)
|
|
$
|
(16,832
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
|
Prepaid (accrued) benefit expense
|
|
$
|
6,690
|
|
|
$
|
7,425
|
|
|
$
|
8,016
|
|
|
$
|
(9,884
|
)
|
|
$
|
(10,320
|
)
|
|
$
|
(10,648
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
|
Total amount recognized in Consolidated
Balance Sheets, all in Other liabilities
|
|
$
|
(1,656
|
)
|
|
$
|
(2,985
|
)
|
|
$
|
(2,589
|
)
|
|
$
|
(15,228
|
)
|
|
$
|
(15,404
|
)
|
|
$
|
(16,832
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
|
Amounts recognized in accumulated other
comprehensive income (loss) (AOCI):
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
|
Prior service cost
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
Net actuarial loss
|
|
(8,345
|
)
|
|
10,410
|
|
|
10,605
|
|
|
(5,345
|
)
|
|
5,084
|
|
|
6,184
|
|
||||||
|
Total amount recognized in AOCI
|
|
$
|
(8,345
|
)
|
|
$
|
10,410
|
|
|
$
|
10,605
|
|
|
$
|
(5,345
|
)
|
|
$
|
5,084
|
|
|
$
|
6,184
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
|
Information for pension plans with an
accumulated benefit obligation greater
than plan assets:
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
|
Projected benefit obligation
|
|
$
|
24,820
|
|
|
$
|
25,075
|
|
|
$
|
28,432
|
|
|
$
|
15,228
|
|
|
$
|
15,404
|
|
|
$
|
16,832
|
|
|
Accumulated benefit obligation
|
|
24,820
|
|
|
25,075
|
|
|
28,432
|
|
|
15,228
|
|
|
15,404
|
|
|
16,832
|
|
||||||
|
Fair value of plan assets
|
|
23,164
|
|
|
22,090
|
|
|
25,843
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||||
|
Horace Mann Educators Corporation
|
|
Annual Report on Form 10-K 127
|
|
($ in thousands)
|
|
Defined Benefit Plan
|
|
Supplemental
Defined Benefit Plans
|
||||||||||||||||||||
|
|
|
Year Ended December 31,
|
|
Year Ended December 31,
|
||||||||||||||||||||
|
|
|
2019
|
|
2018
|
|
2017
|
|
2019
|
|
2018
|
|
2017
|
||||||||||||
|
Components of net periodic pension
(income) expense:
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
|
Service cost:
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
|
Benefit accrual
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
Other expenses
|
|
650
|
|
|
650
|
|
|
650
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||||
|
Interest cost
|
|
997
|
|
|
947
|
|
|
1,091
|
|
|
620
|
|
|
566
|
|
|
631
|
|
||||||
|
Expected return on plan assets
|
|
(1,222
|
)
|
|
(1,377
|
)
|
|
(1,493
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
||||||
|
Settlement loss
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||||
|
Amortization of:
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
|
Prior service cost
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||||
|
Actuarial loss
|
|
310
|
|
|
371
|
|
|
389
|
|
|
256
|
|
|
310
|
|
|
258
|
|
||||||
|
Net periodic pension expense
|
|
$
|
735
|
|
|
$
|
591
|
|
|
$
|
637
|
|
|
$
|
876
|
|
|
$
|
876
|
|
|
$
|
889
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
|
Changes in plan assets and benefit
obligations included in other
comprehensive income (loss):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
|
Prior service cost
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
Net actuarial loss (gain)
|
|
(1,755
|
)
|
|
177
|
|
|
(1,619
|
)
|
|
516
|
|
|
(789
|
)
|
|
805
|
|
||||||
|
Amortization of:
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
|
Prior service cost
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||||
|
Actuarial loss
|
|
(310
|
)
|
|
(371
|
)
|
|
(389
|
)
|
|
(256
|
)
|
|
(310
|
)
|
|
(258
|
)
|
||||||
|
Total recognized in
other comprehensive
income (loss)
|
|
$
|
(2,065
|
)
|
|
$
|
(194
|
)
|
|
$
|
(2,008
|
)
|
|
$
|
260
|
|
|
$
|
(1,099
|
)
|
|
$
|
547
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
|
Weighted average assumptions used to
determine expense:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
|
Discount rate
|
|
4.20
|
%
|
|
3.50
|
%
|
|
3.90
|
%
|
|
4.20
|
%
|
|
3.50
|
%
|
|
3.90
|
%
|
||||||
|
Expected return on plan assets
|
|
5.75
|
%
|
|
5.90
|
%
|
|
6.25
|
%
|
|
*
|
|
|
*
|
|
|
*
|
|
||||||
|
Annual rate of salary increase
|
|
*
|
|
|
*
|
|
|
*
|
|
|
*
|
|
|
*
|
|
|
*
|
|
||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
|
Weighted average assumptions
used to determine benefit obligations
as of December 31:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
|
Discount rate
|
|
3.10
|
%
|
|
4.20
|
%
|
|
3.50
|
%
|
|
3.10
|
%
|
|
4.20
|
%
|
|
3.50
|
%
|
||||||
|
Expected return on plan assets
|
|
5.75
|
%
|
|
5.90
|
%
|
|
6.25
|
%
|
|
*
|
|
|
*
|
|
|
*
|
|
||||||
|
Annual rate of salary increase
|
|
*
|
|
|
*
|
|
|
*
|
|
|
*
|
|
|
*
|
|
|
*
|
|
||||||
|
*
|
Not applicable.
|
|
128 Annual Report on Form 10-K
|
|
Horace Mann Educators Corporation
|
|
($ in thousands)
|
|
|
|
Fair Value Measurements at
Reporting Date Using
|
||||||||||||
|
|
|
Total
|
|
Level 1
|
|
Level 2
|
|
Level 3
|
||||||||
|
December 31, 2019
|
|
|
|
|
|
|
|
|
||||||||
|
Asset category
|
|
|
|
|
|
|
|
|
||||||||
|
Equity security funds (1)
|
|
|
|
|
|
|
|
|
||||||||
|
United States
|
|
$
|
8,883
|
|
|
$
|
—
|
|
|
$
|
8,883
|
|
|
$
|
—
|
|
|
International
|
|
2,214
|
|
|
—
|
|
|
2,214
|
|
|
—
|
|
||||
|
Fixed income funds
|
|
11,116
|
|
|
—
|
|
|
11,116
|
|
|
—
|
|
||||
|
Short-term investment funds
|
|
951
|
|
|
951
|
|
|
—
|
|
|
—
|
|
||||
|
Total
|
|
$
|
23,164
|
|
|
$
|
951
|
|
|
$
|
22,213
|
|
|
$
|
—
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
|
December 31, 2018
|
|
|
|
|
|
|
|
|
||||||||
|
Asset category
|
|
|
|
|
|
|
|
|
||||||||
|
Equity security funds (1)
|
|
|
|
|
|
|
|
|
||||||||
|
United States
|
|
$
|
8,198
|
|
|
$
|
—
|
|
|
$
|
8,198
|
|
|
$
|
—
|
|
|
International
|
|
2,089
|
|
|
—
|
|
|
2,089
|
|
|
—
|
|
||||
|
Fixed income funds
|
|
11,003
|
|
|
—
|
|
|
11,003
|
|
|
—
|
|
||||
|
Short-term investments funds
|
|
800
|
|
|
800
|
|
|
—
|
|
|
—
|
|
||||
|
Total
|
|
$
|
22,090
|
|
|
$
|
800
|
|
|
$
|
21,290
|
|
|
$
|
—
|
|
|
(1)
|
None of the trust fund assets for the defined benefit pension plan have been invested in shares of HMEC's common stock.
|
|
Horace Mann Educators Corporation
|
|
Annual Report on Form 10-K 129
|
|
($ in thousands)
|
|
Defined Benefit Pension Plans
|
||||||
|
|
|
Defined
Benefit Plan
|
|
Supplemental
Defined Benefit Plans
|
||||
|
Minimum funding requirement for 2019
|
|
$
|
—
|
|
|
N/A
|
|
|
|
Expected contributions (approximations) for the year ended
December 31, 2020 as of the time of this Form 10-K (1)
|
|
$
|
—
|
|
|
$
|
1,282
|
|
|
($ in thousands)
|
|
2020
|
|
2021
|
|
2022
|
|
2023
|
|
2024
|
|
2025-2029
|
||||||||||||
|
Pension plans
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
|
Defined benefit plan
|
|
$
|
2,478
|
|
|
$
|
2,277
|
|
|
$
|
2,219
|
|
|
$
|
1,987
|
|
|
$
|
2,099
|
|
|
$
|
7,927
|
|
|
Supplemental retirement plans
|
|
1,282
|
|
|
1,265
|
|
|
1,245
|
|
|
1,222
|
|
|
1,195
|
|
|
5,407
|
|
||||||
|
130 Annual Report on Form 10-K
|
|
Horace Mann Educators Corporation
|
|
($ in thousands)
|
|
Years Ended December 31,
|
||||||||||
|
|
|
2019
|
|
2018
|
|
2017
|
||||||
|
Cash
|
|
$
|
25,206
|
|
|
$
|
11,906
|
|
|
$
|
7,627
|
|
|
Restricted cash
|
|
302
|
|
|
—
|
|
|
—
|
|
|||
|
Total cash and restricted cash shown in the Consolidated Statements of
Cash Flows
|
|
$
|
25,508
|
|
|
$
|
11,906
|
|
|
$
|
7,627
|
|
|
|
|
|
|
|
|
|
||||||
|
Cash paid during the year for:
|
|
|
|
|
|
|
||||||
|
Interest
|
|
$
|
14,104
|
|
|
$
|
12,532
|
|
|
$
|
11,555
|
|
|
Income taxes
|
|
22,946
|
|
|
8,679
|
|
|
16,259
|
|
|||
|
Horace Mann Educators Corporation
|
|
Annual Report on Form 10-K 131
|
|
($ in thousands)
|
|
Years Ended December 31,
|
||||||||||
|
|
|
2019
|
|
2018
|
|
2017
|
||||||
|
Insurance premiums and contract charges earned
|
|
|
|
|
|
|
||||||
|
Property and Casualty
|
|
$
|
683,454
|
|
|
$
|
665,734
|
|
|
$
|
648,263
|
|
|
Supplemental
|
|
65,815
|
|
|
N/A
|
|
|
N/A
|
|
|||
|
Retirement
|
|
29,083
|
|
|
31,269
|
|
|
28,003
|
|
|||
|
Life
|
|
119,602
|
|
|
120,330
|
|
|
118,437
|
|
|||
|
Total
|
|
$
|
897,954
|
|
|
$
|
817,333
|
|
|
$
|
794,703
|
|
|
|
|
|
|
|
|
|
||||||
|
Net investment income
|
|
|
|
|
|
|
||||||
|
Property and Casualty
|
|
$
|
41,740
|
|
|
$
|
40,104
|
|
|
$
|
36,178
|
|
|
Supplemental
|
|
7,480
|
|
|
N/A
|
|
|
N/A
|
|
|||
|
Retirement
|
|
245,475
|
|
|
262,634
|
|
|
261,994
|
|
|||
|
Life
|
|
71,957
|
|
|
74,399
|
|
|
76,195
|
|
|||
|
Corporate and Other
|
|
(85
|
)
|
|
142
|
|
|
78
|
|
|||
|
Intersegment eliminations
|
|
(1,503
|
)
|
|
(772
|
)
|
|
(815
|
)
|
|||
|
Total
|
|
$
|
365,064
|
|
|
$
|
376,507
|
|
|
$
|
373,630
|
|
|
|
|
|
|
|
|
|
||||||
|
Net income (loss)
|
|
|
|
|
|
|
||||||
|
Property and Casualty
|
|
$
|
54,359
|
|
|
$
|
(14,243
|
)
|
|
$
|
17,790
|
|
|
Supplemental
|
|
17,989
|
|
|
N/A
|
|
|
N/A
|
|
|||
|
Retirement
|
|
(4,867
|
)
|
|
41,736
|
|
|
88,473
|
|
|||
|
Life
|
|
17,574
|
|
|
18,754
|
|
|
77,595
|
|
|||
|
Corporate and Other
|
|
99,388
|
|
|
(27,904
|
)
|
|
(14,399
|
)
|
|||
|
Total
|
|
$
|
184,443
|
|
|
$
|
18,343
|
|
|
$
|
169,459
|
|
|
($ in thousands)
|
|
December 31,
|
||||||||||
|
|
|
2019
|
|
2018
|
|
2017
|
||||||
|
Assets
|
|
|
|
|
|
|
||||||
|
Property and Casualty
|
|
$
|
1,327,099
|
|
|
$
|
1,236,362
|
|
|
$
|
1,217,394
|
|
|
Supplemental
|
|
747,602
|
|
|
N/A
|
|
|
N/A
|
|
|||
|
Retirement
|
|
8,330,127
|
|
|
7,866,969
|
|
|
8,063,912
|
|
|||
|
Life
|
|
1,964,993
|
|
|
1,821,351
|
|
|
1,815,732
|
|
|||
|
Corporate and Other
|
|
172,955
|
|
|
149,014
|
|
|
143,784
|
|
|||
|
Intersegment eliminations
|
|
(64,072
|
)
|
|
(41,800
|
)
|
|
(42,482
|
)
|
|||
|
Total
|
|
$
|
12,478,704
|
|
|
$
|
11,031,896
|
|
|
$
|
11,198,340
|
|
|
132 Annual Report on Form 10-K
|
|
Horace Mann Educators Corporation
|
|
($ in thousands)
|
|
Years Ended December 31,
|
||||||||||
|
|
|
2019
|
|
2018
|
|
2017
|
||||||
|
DAC amortization expense
|
|
|
|
|
|
|
||||||
|
Property and Casualty
|
|
$
|
79,453
|
|
|
$
|
79,073
|
|
|
$
|
76,967
|
|
|
Supplemental
|
|
438
|
|
|
N/A
|
|
|
N/A
|
|
|||
|
Retirement
|
|
21,446
|
|
|
23,186
|
|
|
17,759
|
|
|||
|
Life
|
|
7,844
|
|
|
7,630
|
|
|
7,459
|
|
|||
|
Total
|
|
$
|
109,181
|
|
|
$
|
109,889
|
|
|
$
|
102,185
|
|
|
|
|
|
|
|
|
|
||||||
|
Income tax expense (benefit)
|
|
|
|
|
|
|
||||||
|
Property and Casualty
|
|
$
|
13,954
|
|
|
$
|
(6,622
|
)
|
|
$
|
(3,279
|
)
|
|
Supplemental
|
|
5,105
|
|
|
N/A
|
|
|
N/A
|
|
|||
|
Retirement
|
|
33,772
|
|
|
10,000
|
|
|
(19,498
|
)
|
|||
|
Life
|
|
4,907
|
|
|
4,979
|
|
|
(51,876
|
)
|
|||
|
Corporate and Other
|
|
(5,732
|
)
|
|
(7,163
|
)
|
|
(6,119
|
)
|
|||
|
Total
|
|
$
|
52,006
|
|
|
$
|
1,194
|
|
|
$
|
(80,772
|
)
|
|
Horace Mann Educators Corporation
|
|
Annual Report on Form 10-K 133
|
|
($ in thousands, except per share data)
|
|
Three Months Ended
|
||||||||||||||
|
|
|
December 31,
|
|
September 30,
|
|
June 30,
|
|
March 31,
|
||||||||
|
2019
|
|
|
|
|
|
|
|
|
||||||||
|
Insurance premiums and contract charges earned (1)
|
|
$
|
240,392
|
|
|
$
|
239,681
|
|
|
$
|
208,096
|
|
|
$
|
209,785
|
|
|
Insurance premiums written and contract deposits (1)(2)(3)
|
|
346,242
|
|
|
371,216
|
|
|
311,691
|
|
|
295,394
|
|
||||
|
Total revenues (1)
|
|
331,376
|
|
|
334,418
|
|
|
451,478
|
|
|
313,213
|
|
||||
|
Net income (1)
|
|
33,001
|
|
|
25,454
|
|
|
93,822
|
|
|
32,166
|
|
||||
|
Per share information
|
|
|
|
|
|
|
|
|
||||||||
|
Basic
|
|
|
|
|
|
|
|
|
||||||||
|
Net income (1)
|
|
$
|
0.79
|
|
|
$
|
0.61
|
|
|
$
|
2.25
|
|
|
$
|
0.77
|
|
|
Shares of common stock - weighted average (4)
|
|
41,814
|
|
|
41,785
|
|
|
41,762
|
|
|
41,610
|
|
||||
|
Diluted
|
|
|
|
|
|
|
|
|
||||||||
|
Net income (1)
|
|
$
|
0.78
|
|
|
$
|
0.60
|
|
|
$
|
2.24
|
|
|
$
|
0.77
|
|
|
Shares of common stock and equivalent shares - weighted average (4)
|
|
42,093
|
|
|
42,030
|
|
|
41,921
|
|
|
41,785
|
|
||||
|
|
|
|
|
|
|
|
|
|
||||||||
|
2018
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
|
Insurance premiums and contract charges earned
|
|
$
|
201,905
|
|
|
$
|
206,820
|
|
|
$
|
205,610
|
|
|
$
|
202,998
|
|
|
Insurance premiums written and contract deposits (2)
|
|
311,216
|
|
|
338,097
|
|
|
301,722
|
|
|
284,008
|
|
||||
|
Total revenues
|
|
278,535
|
|
|
311,318
|
|
|
306,257
|
|
|
295,489
|
|
||||
|
Net income (loss)
|
|
(20,257
|
)
|
|
12,528
|
|
|
5,917
|
|
|
20,155
|
|
||||
|
Per share information
|
|
|
|
|
|
|
|
|
||||||||
|
Basic
|
|
|
|
|
|
|
|
|
||||||||
|
Net income (loss)
|
|
$
|
(0.49
|
)
|
|
$
|
0.30
|
|
|
$
|
0.14
|
|
|
$
|
0.49
|
|
|
Shares of common stock - weighted average (4)
|
|
41,596
|
|
|
41,683
|
|
|
41,600
|
|
|
41,497
|
|
||||
|
Diluted
|
|
|
|
|
|
|
|
|
||||||||
|
Net income (loss)
|
|
$
|
(0.49
|
)
|
|
$
|
0.30
|
|
|
$
|
0.14
|
|
|
$
|
0.48
|
|
|
Shares of common stock and equivalent shares - weighted average (4)
|
|
41,911
|
|
|
41,850
|
|
|
41,735
|
|
|
41,653
|
|
||||
|
|
|
|
|
|
|
|
|
|
||||||||
|
2017
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
|
Insurance premiums and contract charges earned
|
|
$
|
204,328
|
|
|
$
|
198,935
|
|
|
$
|
195,718
|
|
|
$
|
195,722
|
|
|
Insurance premiums written and contract deposits (2)
|
|
300,416
|
|
|
318,355
|
|
|
311,614
|
|
|
296,732
|
|
||||
|
Total revenues
|
|
302,993
|
|
|
289,817
|
|
|
291,436
|
|
|
287,304
|
|
||||
|
Net income
|
|
125,329
|
|
|
26,551
|
|
|
2,261
|
|
|
15,318
|
|
||||
|
Per share information
|
|
|
|
|
|
|
|
|
||||||||
|
Basic
|
|
|
|
|
|
|
|
|
||||||||
|
Net income (5)
|
|
$
|
3.03
|
|
|
$
|
0.64
|
|
|
$
|
0.05
|
|
|
$
|
0.37
|
|
|
Shares of common stock - weighted average (4)
|
|
41,419
|
|
|
41,433
|
|
|
41,368
|
|
|
41,135
|
|
||||
|
Diluted
|
|
|
|
|
|
|
|
|
||||||||
|
Net income (5)
|
|
$
|
3.00
|
|
|
$
|
0.64
|
|
|
$
|
0.05
|
|
|
$
|
0.37
|
|
|
Shares of common stock and equivalent shares - weighted average (4)
|
|
41,718
|
|
|
41,575
|
|
|
41,493
|
|
|
41,342
|
|
||||
|
(1)
|
See Note 2 for more information regarding the acquisition of NTA on July 1, 2019.
|
|
(2)
|
This measure is not based on accounting principles generally accepted in the U.S. (non-GAAP). An explanation of this measure is contained in the Glossary of Selected Terms included as an exhibit in the Company's reports filed with the SEC.
|
|
(3)
|
Excludes the annuity reinsurance agreement accounted for under the deposit method that is discussed in Note 6.
|
|
(4)
|
Rounded to thousands.
|
|
(5)
|
For the three months ended December 31, 2017, net income per basic share of $3.03 and net income per diluted share of $3.00 benefited $2.39 and $2.37, respectively, from TCJA.
|
|
134 Annual Report on Form 10-K
|
|
Horace Mann Educators Corporation
|
|
•
|
pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the Company;
|
|
•
|
provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with U.S. generally accepted accounting principles, and that receipts and expenditures are being made only in accordance with authorizations of the Company's management and directors; and
|
|
•
|
provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of assets that could have a material effect on the financial statements.
|
|
Horace Mann Educators Corporation
|
|
Annual Report on Form 10-K 135
|
|
136 Annual Report on Form 10-K
|
|
Horace Mann Educators Corporation
|
|
Horace Mann Educators Corporation
|
|
Annual Report on Form 10-K 137
|
|
(a)
|
The following sections of the Company's Proxy Statement for its 2020 Annual Meeting of Shareholders, are incorporated herein by reference: "Board of Directors and Committees", "Executive Officers", "Section 16(a) Beneficial Ownership Reporting Compliance", and "Corporate Governance".
|
|
(b)
|
The Company has adopted a code of ethics that applies to its principal executive officer, principal financial officer, principal accounting officer and all other employees of the Company. In addition, the Board has adopted the code of ethics for its Board members as it applies to each Board member's business conduct on behalf of the Company. The code of ethics is posted on the Company's website, www.horacemann.com, under Investors — Corporate Overview — Governance Documents. In addition, amendments to the code of ethics and any grant of a waiver from a provision of the code of ethics requiring disclosure under applicable SEC rules will be posted on the Company's website set forth above within four days after such amendment or grant of waiver rather than by filing a Current Report on Form 8-K.
|
|
(a)
|
The "Security Ownership of Certain Beneficial Owners and Management" section of the Company's Proxy Statement for its 2020 Annual Meeting of Shareholders, is incorporated herein by reference.
|
|
(b)
|
The "Equity Compensation Plan Information" section of the Company's Proxy Statement for its 2020 Annual Meeting of Shareholders, is incorporated herein by reference. Additional information on share-based equity compensation under the Company's equity compensation plans is available in Part II - Item 8, Note 13 of the Consolidated Financial Statements.
|
|
138 Annual Report on Form 10-K
|
|
Horace Mann Educators Corporation
|
|
(a)(1) The following consolidated financial statements of the Company are contained in Part II - Item 8 of this report, Page 70 to Page 134
|
|
|
|
|
|
(a)(2) Financial statement schedules
|
|
|
|
|
|
Schedule I - Summary of Investments Other than Investments in Related Parties, Page 140
|
|
|
|
|
|
Schedule II - Condensed Financial Information of Registrant, Page 141 to Page 144
|
|
|
|
|
|
Schedules III and VI Combined - Supplementary Insurance Information and Supplemental Information Concerning Property and Casualty Insurance Operations, Page 145
|
|
|
|
|
|
Schedule IV - Reinsurance, Page 146
|
|
|
Horace Mann Educators Corporation
|
|
Annual Report on Form 10-K 139
|
|
Type of Investments
|
|
Cost (1)
|
|
Fair
Value
|
|
Amount
Shown in
Balance
Sheet
|
||||||
|
Fixed maturity securities
|
|
|
|
|
|
|
|
|
|
|||
|
U.S. Government and federally sponsored agency obligations
|
|
$
|
906,886
|
|
|
$
|
956,104
|
|
|
$
|
956,104
|
|
|
States, municipalities and political subdivisions
|
|
1,545,787
|
|
|
1,686,203
|
|
|
1,686,203
|
|
|||
|
Foreign government bonds
|
|
42,801
|
|
|
45,370
|
|
|
45,370
|
|
|||
|
Public utilities
|
|
54,519
|
|
|
61,748
|
|
|
61,748
|
|
|||
|
All other corporate bonds
|
|
1,388,035
|
|
|
1,495,426
|
|
|
1,495,426
|
|
|||
|
Asset-backed securities
|
|
1,068,661
|
|
|
1,079,586
|
|
|
1,079,586
|
|
|||
|
Residential mortgage-backed securities (non-agency)
|
|
76,237
|
|
|
75,933
|
|
|
75,933
|
|
|||
|
Commercial mortgage-backed securities
|
|
352,164
|
|
|
367,055
|
|
|
367,055
|
|
|||
|
Redeemable preferred stocks
|
|
21,890
|
|
|
24,251
|
|
|
24,251
|
|
|||
|
|
|
|
|
|
|
|
||||||
|
Total fixed maturity securities
|
|
5,456,980
|
|
|
5,791,676
|
|
|
5,791,676
|
|
|||
|
|
|
|
|
|
|
|
||||||
|
Equity securities
|
|
|
|
|
|
|
|
|
|
|||
|
Industrial, miscellaneous and all other
|
|
13,360
|
|
|
13,360
|
|
|
13,360
|
|
|||
|
Banking & finance and insurance companies
|
|
5,706
|
|
|
5,706
|
|
|
5,706
|
|
|||
|
Public utilities
|
|
1,052
|
|
|
1,052
|
|
|
1,052
|
|
|||
|
Non-redeemable preferred stocks
|
|
60,325
|
|
|
60,325
|
|
|
60,325
|
|
|||
|
Closed-end fund
|
|
21,421
|
|
|
21,421
|
|
|
21,421
|
|
|||
|
|
|
|
|
|
|
|
||||||
|
Total equity securities
|
|
101,864
|
|
|
101,864
|
|
|
101,864
|
|
|||
|
|
|
|
|
|
|
|
||||||
|
Limited partnership interests
|
|
383,717
|
|
|
XXX
|
|
383,717
|
|
||||
|
Short-term investments
|
|
172,667
|
|
|
XXX
|
|
172,667
|
|
||||
|
Policy loans
|
|
153,541
|
|
|
XXX
|
|
153,541
|
|
||||
|
Derivatives
|
|
8,657
|
|
|
$
|
13,239
|
|
|
13,239
|
|
||
|
Mortgage loans
|
|
9,771
|
|
|
XXX
|
|
9,771
|
|
||||
|
Other
|
|
12,758
|
|
|
XXX
|
|
12,758
|
|
||||
|
|
|
|
|
|
|
|
||||||
|
Total investments
|
|
$
|
6,299,955
|
|
|
XXX
|
|
$
|
6,639,233
|
|
||
|
(1)
|
Bonds at original cost reduced by repayments and adjusted for amortization of premiums or accrual of discounts and impairment in value of specifically identified investments.
|
|
140 Annual Report on Form 10-K
|
|
Horace Mann Educators Corporation
|
|
Horace Mann Educators Corporation
|
|
Annual Report on Form 10-K 141
|
|
|
|
Year Ended December 31,
|
||||||||||
|
|
|
2019
|
|
2018
|
|
2017
|
||||||
|
Revenues
|
|
|
|
|
|
|
|
|
|
|||
|
Net investment income
|
|
$
|
(135
|
)
|
|
$
|
100
|
|
|
$
|
34
|
|
|
Realized investment gains
|
|
—
|
|
|
—
|
|
|
—
|
|
|||
|
|
|
|
|
|
|
|
||||||
|
Total revenues
|
|
(135
|
)
|
|
100
|
|
|
34
|
|
|||
|
|
|
|
|
|
|
|
||||||
|
Expenses
|
|
|
|
|
|
|
||||||
|
Interest expense
|
|
14,272
|
|
|
11,892
|
|
|
11,835
|
|
|||
|
Other
|
|
12,632
|
|
|
10,898
|
|
|
5,101
|
|
|||
|
|
|
|
|
|
|
|
||||||
|
Total expenses
|
|
26,904
|
|
|
22,790
|
|
|
16,936
|
|
|||
|
|
|
|
|
|
|
|
||||||
|
Loss before income tax benefit and equity in net earnings of subsidiaries
|
|
(27,039
|
)
|
|
(22,690
|
)
|
|
(16,902
|
)
|
|||
|
Income tax benefit
|
|
(6,029
|
)
|
|
(4,723
|
)
|
|
(6,667
|
)
|
|||
|
Loss before equity in net earnings of subsidiaries
|
|
(21,010
|
)
|
|
(17,967
|
)
|
|
(10,235
|
)
|
|||
|
Equity in net earnings of subsidiaries
|
|
205,453
|
|
|
36,310
|
|
|
179,694
|
|
|||
|
|
|
|
|
|
|
|
||||||
|
Net income
|
|
$
|
184,443
|
|
|
$
|
18,343
|
|
|
$
|
169,459
|
|
|
142 Annual Report on Form 10-K
|
|
Horace Mann Educators Corporation
|
|
|
|
Year Ended December 31,
|
||||||||||
|
|
|
2019
|
|
2018
|
|
2017
|
||||||
|
Cash flows from operating activities
|
|
|
|
|
|
|
|
|
|
|||
|
Net Income
|
|
$
|
184,443
|
|
|
$
|
18,343
|
|
|
$
|
169,459
|
|
|
Equity in net income of subsidiaries
|
|
(205,453
|
)
|
|
(36,310
|
)
|
|
(179,694
|
)
|
|||
|
Dividends received from subsidiaries
|
|
363,250
|
|
|
61,000
|
|
|
56,900
|
|
|||
|
Changes in:
|
|
|
|
|
|
|
||||||
|
Income taxes
|
|
3,369
|
|
|
(4,939
|
)
|
|
(7,041
|
)
|
|||
|
Operating assets and liabilities
|
|
8,310
|
|
|
(1,792
|
)
|
|
(260
|
)
|
|||
|
Other
|
|
686
|
|
|
13,804
|
|
|
9,861
|
|
|||
|
|
|
|
|
|
|
|
||||||
|
Net cash provided by operating activities
|
|
354,605
|
|
|
50,106
|
|
|
49,225
|
|
|||
|
|
|
|
|
|
|
|
||||||
|
Cash flows from investing activities
|
|
|
|
|
|
|
||||||
|
Net increase (decrease) in short-term investments
|
|
3,336
|
|
|
1,621
|
|
|
(2,338
|
)
|
|||
|
Acquisition of businesses
|
|
(444,124
|
)
|
|
—
|
|
|
—
|
|
|||
|
|
|
|
|
|
|
|
||||||
|
Net cash provided by (used in) investing activities
|
|
(440,788
|
)
|
|
1,621
|
|
|
(2,338
|
)
|
|||
|
|
|
|
|
|
|
|
||||||
|
Cash flows from financing activities
|
|
|
|
|
|
|
||||||
|
Dividends paid to shareholders
|
|
(47,333
|
)
|
|
(46,689
|
)
|
|
(46,114
|
)
|
|||
|
Principal borrowings on senior revolving credit facility
|
|
135,000
|
|
|
—
|
|
|
—
|
|
|||
|
Acquisition of treasury stock
|
|
—
|
|
|
(5,088
|
)
|
|
(1,660
|
)
|
|||
|
Proceeds from exercise of stock options
|
|
1,730
|
|
|
3,627
|
|
|
4,190
|
|
|||
|
Withholding tax payments on RSUs tendered
|
|
(3,680
|
)
|
|
(3,165
|
)
|
|
(3,245
|
)
|
|||
|
|
|
|
|
|
|
|
||||||
|
Net cash provided by (used in) financing activities
|
|
85,717
|
|
|
(51,315
|
)
|
|
(46,829
|
)
|
|||
|
|
|
|
|
|
|
|
||||||
|
Net increase (decrease) in cash
|
|
(466
|
)
|
|
412
|
|
|
58
|
|
|||
|
Cash at beginning of period
|
|
538
|
|
|
126
|
|
|
68
|
|
|||
|
|
|
|
|
|
|
|
||||||
|
Cash at end of period
|
|
$
|
72
|
|
|
$
|
538
|
|
|
$
|
126
|
|
|
Horace Mann Educators Corporation
|
|
Annual Report on Form 10-K 143
|
|
144 Annual Report on Form 10-K
|
|
Horace Mann Educators Corporation
|
|
Column identification for
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||||||||||||||||
|
Schedule III: A
|
|
B
|
|
C
|
|
|
|
D
|
|
E
|
|
F
|
|
G
|
|
H
|
|
|
|
I
|
|
J
|
|
|
|
K
|
||||||||||||||||||||||||||||||
|
Schedule VI: A
|
|
B
|
|
C
|
|
D
|
|
E
|
|
|
|
F
|
|
G
|
|
|
|
H
|
|
I
|
|
|
|
J
|
|
K
|
||||||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||||||||||||||||
|
|
|
Deferred
policy acquisition
costs
|
|
Future policy
benefits, claims and claim expenses |
|
Discount,
if any,
deducted in
previous
column
|
|
Unearned
premiums
|
|
Other
policy
claims and
benefits
payable
|
|
Premium
revenue/
premium
earned
|
|
Net investment
income
|
|
Benefits,
claims
and
settlement
expenses
|
|
Claims and claim
adjustment expenses
incurred related to
|
|
Amortization
of deferred
policy
acquisition
costs
|
|
Other
operating
expenses
|
|
Paid claims and claim adjustment expenses
|
|
Premiums written
|
||||||||||||||||||||||||||||||
|
Segment
|
|
|
|
|
|
|
|
|
|
Current
year
|
|
Prior
years
|
|
|
|
|
||||||||||||||||||||||||||||||||||||||||
|
Year Ended December 31, 2019
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||
|
Property and Casualty
|
|
$
|
28,616
|
|
|
$
|
386,976
|
|
|
$
|
—
|
|
|
$
|
273,998
|
|
|
$
|
—
|
|
|
$
|
683,454
|
|
|
$
|
41,740
|
|
|
$
|
475,563
|
|
|
$
|
483,062
|
|
|
$
|
(7,500
|
)
|
|
$
|
79,453
|
|
|
$
|
105,489
|
|
|
$
|
486,547
|
|
|
$
|
683,101
|
|
|
Supplemental
|
|
1,967
|
|
|
390,276
|
|
|
xxx
|
|
|
3,218
|
|
|
—
|
|
|
65,815
|
|
|
7,480
|
|
|
24,723
|
|
|
xxx
|
|
|
xxx
|
|
|
438
|
|
|
26,476
|
|
|
xxx
|
|
|
xxx
|
|
||||||||||||||
|
Retirement
|
|
185,294
|
|
|
4,698,461
|
|
|
xxx
|
|
|
734
|
|
|
643,826
|
|
|
29,083
|
|
|
245,475
|
|
|
173,116
|
|
|
xxx
|
|
|
xxx
|
|
|
21,446
|
|
|
90,782
|
|
|
xxx
|
|
|
xxx
|
|
||||||||||||||
|
Life
|
|
60,791
|
|
|
1,201,593
|
|
|
xxx
|
|
|
1,213
|
|
|
3,457
|
|
|
119,602
|
|
|
71,957
|
|
|
124,452
|
|
|
xxx
|
|
|
xxx
|
|
|
7,844
|
|
|
37,820
|
|
|
xxx
|
|
|
xxx
|
|
||||||||||||||
|
Other, including consolidating
eliminations
|
|
N/A
|
|
|
N/A
|
|
|
xxx
|
|
|
N/A
|
|
|
N/A
|
|
|
N/A
|
|
|
(1,588
|
)
|
|
N/A
|
|
|
xxx
|
|
|
xxx
|
|
|
N/A
|
|
|
26,434
|
|
|
xxx
|
|
|
xxx
|
|
||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||||||||||||||
|
Total
|
|
$
|
276,668
|
|
|
$
|
6,677,306
|
|
|
xxx
|
|
|
$
|
279,163
|
|
|
$
|
647,283
|
|
|
$
|
897,954
|
|
|
$
|
365,064
|
|
|
$
|
797,854
|
|
|
xxx
|
|
|
xxx
|
|
|
$
|
109,181
|
|
|
$
|
287,001
|
|
|
xxx
|
|
|
xxx
|
|
|||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||||||||||||||
|
Year Ended December 31, 2018
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||
|
Property and Casualty
|
|
$
|
30,033
|
|
|
$
|
367,180
|
|
|
$
|
—
|
|
|
$
|
274,351
|
|
|
$
|
—
|
|
|
$
|
665,734
|
|
|
$
|
40,104
|
|
|
$
|
547,659
|
|
|
$
|
547,959
|
|
|
$
|
(300
|
)
|
|
$
|
79,073
|
|
|
$
|
101,834
|
|
|
$
|
531,977
|
|
|
$
|
681,583
|
|
|
Retirement
|
|
209,232
|
|
|
4,573,170
|
|
|
xxx
|
|
|
704
|
|
|
764,607
|
|
|
31,269
|
|
|
262,634
|
|
|
168,732
|
|
|
xxx
|
|
|
xxx
|
|
|
23,186
|
|
|
57,269
|
|
|
xxx
|
|
|
xxx
|
|
||||||||||||||
|
Life
|
|
59,477
|
|
|
1,167,557
|
|
|
xxx
|
|
|
1,170
|
|
|
3,381
|
|
|
120,330
|
|
|
74,399
|
|
|
127,368
|
|
|
xxx
|
|
|
xxx
|
|
|
7,630
|
|
|
36,314
|
|
|
xxx
|
|
|
xxx
|
|
||||||||||||||
|
Other, including consolidating
eliminations
|
|
N/A
|
|
|
N/A
|
|
|
xxx
|
|
|
N/A
|
|
|
N/A
|
|
|
N/A
|
|
|
(630
|
)
|
|
N/A
|
|
|
xxx
|
|
|
xxx
|
|
|
N/A
|
|
|
22,997
|
|
|
xxx
|
|
|
xxx
|
|
||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||||||||||||||
|
Total
|
|
$
|
298,742
|
|
|
$
|
6,107,907
|
|
|
xxx
|
|
|
$
|
276,225
|
|
|
$
|
767,988
|
|
|
$
|
817,333
|
|
|
$
|
376,507
|
|
|
$
|
843,759
|
|
|
xxx
|
|
|
xxx
|
|
|
$
|
109,889
|
|
|
$
|
218,414
|
|
|
xxx
|
|
|
xxx
|
|
|||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||||||||||||||
|
Year Ended December 31, 2017
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||
|
Property and Casualty
|
|
$
|
29,191
|
|
|
$
|
319,182
|
|
|
$
|
—
|
|
|
$
|
258,502
|
|
|
$
|
—
|
|
|
$
|
648,263
|
|
|
$
|
36,178
|
|
|
$
|
496,289
|
|
|
$
|
498,989
|
|
|
$
|
(2,700
|
)
|
|
$
|
76,967
|
|
|
$
|
96,488
|
|
|
$
|
481,074
|
|
|
$
|
662,760
|
|
|
Retirement
|
|
174,661
|
|
|
4,466,039
|
|
|
xxx
|
|
|
705
|
|
|
720,926
|
|
|
28,003
|
|
|
261,994
|
|
|
159,385
|
|
|
xxx
|
|
|
xxx
|
|
|
17,759
|
|
|
49,733
|
|
|
xxx
|
|
|
xxx
|
|
||||||||||||||
|
Life
|
|
53,974
|
|
|
1,136,263
|
|
|
xxx
|
|
|
1,332
|
|
|
3,335
|
|
|
118,437
|
|
|
76,195
|
|
|
125,267
|
|
|
xxx
|
|
|
xxx
|
|
|
7,459
|
|
|
36,550
|
|
|
xxx
|
|
|
xxx
|
|
||||||||||||||
|
Other, including consolidating
eliminations
|
|
N/A
|
|
|
N/A
|
|
|
xxx
|
|
|
N/A
|
|
|
N/A
|
|
|
N/A
|
|
|
(737
|
)
|
|
N/A
|
|
|
xxx
|
|
|
xxx
|
|
|
N/A
|
|
|
16,966
|
|
|
xxx
|
|
|
xxx
|
|
||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||||||||||||||
|
Total
|
|
$
|
257,826
|
|
|
$
|
5,921,484
|
|
|
xxx
|
|
|
$
|
260,539
|
|
|
$
|
724,261
|
|
|
$
|
794,703
|
|
|
$
|
373,630
|
|
|
$
|
780,941
|
|
|
xxx
|
|
|
xxx
|
|
|
$
|
102,185
|
|
|
$
|
199,737
|
|
|
xxx
|
|
|
xxx
|
|
|||||
|
Horace Mann Educators Corporation
|
|
Annual Report on Form 10-K 145
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||
|
Column A
|
|
Column B
|
|
Column C
|
|
Column D
|
|
Column E
|
|
Column F
|
|||||||||
|
|
|
Gross
Amount
|
|
Ceded to
Other
Companies
|
|
Assumed
from Other
Companies
|
|
Net
Amount
|
|
Percentage
of Amount
Assumed to Net
|
|||||||||
|
|
|
|
|
|
|
||||||||||||||
|
Year Ended December 31, 2019
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
|
Life insurance in force
|
|
$
|
19,179,823
|
|
|
$
|
4,813,185
|
|
|
$
|
—
|
|
|
$
|
14,366,638
|
|
|
—
|
|
|
Premiums
|
|
|
|
|
|
|
|
|
|
|
|||||||||
|
Property and Casualty
|
|
$
|
689,156
|
|
|
$
|
16,457
|
|
|
$
|
10,755
|
|
|
$
|
683,454
|
|
|
1.6
|
%
|
|
Supplemental
|
|
65,918
|
|
|
104
|
|
|
1
|
|
|
65,815
|
|
|
—
|
|
||||
|
Retirement
|
|
35,602
|
|
|
6,519
|
|
|
—
|
|
|
29,083
|
|
|
—
|
|
||||
|
Life
|
|
126,934
|
|
|
7,332
|
|
|
—
|
|
|
119,602
|
|
|
—
|
|
||||
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||
|
Total premiums
|
|
$
|
917,610
|
|
|
$
|
30,412
|
|
|
$
|
10,756
|
|
|
$
|
897,954
|
|
|
1.2
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||
|
Year Ended December 31, 2018
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
|
Life insurance in force
|
|
$
|
18,277,691
|
|
|
$
|
4,505,208
|
|
|
$
|
—
|
|
|
$
|
13,772,483
|
|
|
—
|
|
|
Premiums
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
|
Property and Casualty
|
|
$
|
682,478
|
|
|
$
|
21,767
|
|
|
$
|
5,023
|
|
|
$
|
665,734
|
|
|
0.8
|
%
|
|
Retirement
|
|
31,269
|
|
|
—
|
|
|
—
|
|
|
31,269
|
|
|
—
|
|
||||
|
Life
|
|
127,400
|
|
|
7,070
|
|
|
—
|
|
|
120,330
|
|
|
—
|
|
||||
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||
|
Total premiums
|
|
$
|
841,147
|
|
|
$
|
28,837
|
|
|
$
|
5,023
|
|
|
$
|
817,333
|
|
|
0.6
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||
|
Year Ended December 31, 2017
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
|
Life insurance in force
|
|
$
|
17,564,270
|
|
|
$
|
4,295,412
|
|
|
$
|
—
|
|
|
$
|
13,268,858
|
|
|
—
|
|
|
Premiums
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
|
Property and Casualty
|
|
$
|
658,960
|
|
|
$
|
15,337
|
|
|
$
|
4,640
|
|
|
$
|
648,263
|
|
|
0.7
|
%
|
|
Retirement
|
|
28,003
|
|
|
—
|
|
|
—
|
|
|
28,003
|
|
|
—
|
|
||||
|
Life
|
|
125,136
|
|
|
6,699
|
|
|
—
|
|
|
118,437
|
|
|
—
|
|
||||
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||
|
Total premiums
|
|
$
|
812,099
|
|
|
$
|
22,036
|
|
|
$
|
4,640
|
|
|
$
|
794,703
|
|
|
0.6
|
%
|
|
146 Annual Report on Form 10-K
|
|
Horace Mann Educators Corporation
|
|
Horace Mann Educators Corporation
|
|
Annual Report on Form 10-K 147
|
|
|
|
|
|
10.2(c)*
|
|
|
|
|
|
|
|
10.2(d)*
|
|
|
|
|
|
|
|
10.2(e)*
|
|
|
|
|
|
|
|
10.3*
|
|
|
|
|
|
|
|
10.3(a)*
|
|
|
|
|
|
|
|
10.3(b)*
|
|
|
|
|
|
|
|
10.3(c)*
|
|
|
|
|
|
|
|
10.3(d)*
|
|
|
|
|
|
|
|
10.3(e)*
|
|
|
|
|
|
|
|
10.3(f)*
|
|
|
|
|
|
|
|
10.3(g)*
|
|
|
|
|
|
|
|
148 Annual Report on Form 10-K
|
|
Horace Mann Educators Corporation
|
|
10.4*
|
|
|
|
|
|
|
|
10.5*
|
|
|
|
|
|
|
|
10.6*
|
|
|
|
|
|
|
|
10.7*
|
|
|
|
|
|
|
|
10.8*
|
|
|
|
|
|
|
|
10.9*
|
|
|
|
|
|
|
|
10.9(a)*
|
|
|
|
|
|
|
|
10.10*
|
|
|
|
|
|
|
|
10.10(a)*
|
|
|
|
|
|
|
|
10.11*
|
|
|
|
|
|
|
|
10.11(a)*
|
|
|
|
|
|
|
|
10.11(b)*
|
|
|
|
|
|
|
|
10.12
|
|
|
|
|
|
|
|
Horace Mann Educators Corporation
|
|
Annual Report on Form 10-K 149
|
|
150 Annual Report on Form 10-K
|
|
Horace Mann Educators Corporation
|
|
HORACE MANN EDUCATORS CORPORATION
|
|
|
||||
|
|
|
|
|
|
|
|
|
By:
|
|
/s/ Marita Zuraitis
|
|
President and Chief Executive Officer
|
|
February 28, 2020
|
|
|
|
Marita Zuraitis
|
|
|
|
|
|
|
|
Signature
|
|
Title
|
|
Date
|
|
|
|
|
|
|
|
|
|
By:
|
|
/s/ Marita Zuraitis
|
|
President, Chief Executive Officer and Director
|
|
February 28, 2020
|
|
|
|
Marita Zuraitis
|
|
(Principal Executive Officer)
|
|
|
|
|
|
|
|
|
|
|
|
By:
|
|
/s/ Bret A. Conklin
|
|
Executive Vice President and Chief Financial Officer
|
|
February 28, 2020
|
|
|
|
Bret A. Conklin
|
|
(Principal Financial Officer)
|
|
|
|
|
|
|
|
|
|
|
|
By:
|
|
/s/ Kimberly A. Johnson
|
|
Senior Vice President and Controller
|
|
February 28, 2020
|
|
|
|
Kimberly A. Johnson
|
|
(Principal Accounting Officer)
|
|
|
|
|
|
|
|
|
|
|
|
By:
|
|
/s/ H. Wade Reece
|
|
Chairman of the Board of Directors
|
|
February 28, 2020
|
|
|
|
H. Wade Reece
|
|
|
|
|
|
|
|
|
|
|
|
|
|
By:
|
|
/s/ Mark S. Casady
|
|
Director
|
|
February 28, 2020
|
|
|
|
Mark S. Casady
|
|
|
|
|
|
|
|
|
|
|
|
|
|
By:
|
|
/s/ Daniel A. Domenech
|
|
Director
|
|
February 28, 2020
|
|
|
|
Daniel A. Domenech
|
|
|
|
|
|
|
|
|
|
|
|
|
|
By:
|
|
/s/ Stephen J. Hasenmiller
|
|
Director
|
|
February 28, 2020
|
|
|
|
Stephen J. Hasenmiller
|
|
|
|
|
|
|
|
|
|
|
|
|
|
By:
|
|
/s/ Perry G. Hines
|
|
Director
|
|
February 28, 2020
|
|
|
|
Perry G. Hines
|
|
|
|
|
|
|
|
|
|
|
|
|
|
By:
|
|
/s/ Mark E. Konen
|
|
Director
|
|
February 28, 2020
|
|
|
|
Mark E. Konen
|
|
|
|
|
|
|
|
|
|
|
|
|
|
By:
|
|
/s/ Beverley J. McClure
|
|
Director
|
|
February 28, 2020
|
|
|
|
Beverley J. McClure
|
|
|
|
|
|
|
|
|
|
|
|
|
|
By:
|
|
/s/ Robert Stricker
|
|
Director
|
|
February 28, 2020
|
|
|
|
Robert Stricker
|
|
|
|
|
|
|
|
|
|
|
|
|
|
By:
|
|
/s/ Steven O. Swyers
|
|
Director
|
|
February 28, 2020
|
|
|
|
Steven O. Swyers
|
|
|
|
|
|
Horace Mann Educators Corporation
|
|
Annual Report on Form 10-K 151
|
|
•
|
authorize the Board to make, alter or repeal the Bylaws;
|
|
•
|
provide that only the Chairman, the President or the Board may call a special meeting of the Shareholders; and
|
|
•
|
provide that the directors may fill any vacancies on the Board, including newly created Board seats resulting from an increase in the authorized number of directors.
|
|
|
|
Year Ended December 31,
|
||||||||||
|
|
|
2019
|
|
2018
|
|
2017
|
||||||
|
Basic:
|
|
|
|
|
|
|
|
|
|
|||
|
|
|
|
|
|
|
|
||||||
|
Net income
|
|
$
|
184,443
|
|
|
$
|
18,343
|
|
|
$
|
169,459
|
|
|
Weighted average number of common shares during the period
|
|
41,738
|
|
|
41,570
|
|
|
41,365
|
|
|||
|
|
|
|
|
|
|
|
||||||
|
Net income per share - basic
|
|
$
|
4.42
|
|
|
$
|
0.44
|
|
|
$
|
4.10
|
|
|
|
|
|
|
|
|
|
||||||
|
Diluted:
|
|
|
|
|
|
|
|
|
|
|||
|
|
|
|
|
|
|
|
||||||
|
Net income
|
|
$
|
184,443
|
|
|
$
|
18,343
|
|
|
$
|
169,459
|
|
|
Weighted average number of common shares during the period
|
|
41,738
|
|
|
41,570
|
|
|
41,365
|
|
|||
|
Weighted average number of common equivalent shares to reflect
the dilutive effect of common stock equivalent securities:
|
|
|
|
|
|
|
|
|
|
|||
|
Stock options
|
|
79
|
|
|
100
|
|
|
112
|
|
|||
|
Common stock units related to deferred compensation for employees
|
|
—
|
|
|
25
|
|
|
25
|
|
|||
|
Restricted common stock units related to incentive compensation
|
|
132
|
|
|
199
|
|
|
63
|
|
|||
|
Total common and common equivalent shares adjusted
to calculate diluted earnings per share
|
|
41,949
|
|
|
41,894
|
|
|
41,565
|
|
|||
|
|
|
|
|
|
|
|
||||||
|
Net income per share – diluted
|
|
$
|
4.40
|
|
|
$
|
0.44
|
|
|
$
|
4.08
|
|
|
|
|
|
|
|
|
|
||||||
|
Percentage of dilution compared to basic net income per share
|
|
0.5
|
%
|
|
—
|
%
|
|
0.5
|
%
|
|||
|
a)
|
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
|
|
b)
|
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
|
|
c)
|
Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
|
|
d)
|
Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
|
|
5.
|
The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors:
|
|
a)
|
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
|
|
b)
|
Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
|
|
/s/ Marita Zuraitis
|
|
|
|
Marita Zuraitis, Chief Executive Officer
|
|
|
|
Horace Mann Educators Corporation
|
|
|
|
|
|
|
|
Date:
|
February 28, 2020
|
|
|
1.
|
I have reviewed this Annual Report on Form 10-K for the year ended December 31, 2019 of Horace Mann Educators Corporation;
|
|
2.
|
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
|
|
3.
|
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
|
|
4.
|
The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
|
|
a)
|
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
|
|
b)
|
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
|
|
c)
|
Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
|
|
d)
|
Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
|
|
5.
|
The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors:
|
|
a)
|
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
|
|
b)
|
Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
|
|
/s/ Bret A. Conklin
|
|
|
|
Bret A. Conklin, Chief Financial Officer
|
|
|
|
Horace Mann Educators Corporation
|
|
|
|
|
|
|
|
Date:
|
February 28, 2020
|
|
|
(1)
|
The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
|
|
(2)
|
The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.
|
|
/s/ Marita Zuraitis
|
|
|
|
Marita Zuraitis
|
|
|
|
Chief Executive Officer
|
|
|
|
|
|
|
|
Date:
|
February 28, 2020
|
|
|
(1)
|
The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
|
|
(2)
|
The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.
|
|
/s/ Bret A. Conklin
|
|
|
|
Bret A. Conklin
|
|
|
|
Chief Financial Officer
|
|
|
|
|
|
|
|
Date:
|
February 28, 2020
|
|
|
•
|
Pretax core earnings (loss) - Pretax net income (loss) excluding pretax impact of net investment gains (losses), discontinued operations, goodwill impairment charges and cumulative effect of changes in accounting principles when applicable. Income before income taxes is the most comparable GAAP measure.
|
|
•
|
Segment core earnings - Determined in the same manner as core earnings on a consolidated basis. Management uses segment core earnings to analyze each segment's performance and as a tool in making business decisions. Financial statement users also consider core earnings when analyzing the results and trends of insurance companies.
|
|
•
|
Core return on equity - LTM: The ratio of (1) trailing 12 month core earnings to (2) 5 quarter average shareholders’ equity excluding net unrealized investment gains and losses on securities and the effect of a change in tax laws and tax rates at enactment date. Net income return on equity - LTM is the most comparable GAAP measure.
|
|
•
|
Net income return on equity - Annualized: The ratio of (1) annualized net income to (2) the 2 quarter average shareholders' equity (but the year-end measures are still based on a 5 quarter average).
|
|
•
|
Core return on equity - Annualized: The ratio of (1) annualized core earnings to (2) the 2 quarter average shareholders’ equity excluding net unrealized investment gains and losses on securities and the effect of a change in tax laws and tax rates at enactment date (but the year-end measures are still based on a 5 quarter average). Net income return on equity - Annualized is the most comparable GAAP measure.
|
|
•
|
Loss ratio - The ratio of (1) the sum of net incurred losses and loss adjustment expenses to (2) net earned premiums.
|
|
•
|
Underlying loss ratio - The sum of the Loss Ratio adjusted to remove the effect of catastrophe costs and prior years' reserve development. The Loss Ratio is the most directly comparable GAAP measure. Management believes this ratio provides a valuable measure of the Company's underlying underwriting performance that may be obscured by the effects of catastrophe costs and prior years' reserve development, the amounts of which may be significant and may vary significantly between periods.
|
|
•
|
Expense ratio - The ratio of (1) the sum of operating expenses and the amortization of policy acquisition costs to (2) net earned premiums.
|
|
•
|
Combined ratio - The sum of the Loss Ratio and the Expense Ratio. A Combined Ratio less than 100% generally indicates profitable underwriting prior to the consideration of net investment income.
|
|
•
|
Underlying combined ratio or combined ratio excluding catastrophe costs and prior years’ reserve development - The sum of the Loss Ratio and the Expense Ratio adjusted to remove the effect of catastrophe costs and prior years’ reserve development. The Combined Ratio is the most directly comparable GAAP measure. Management believes this ratio provides a valuable measure of the Company’s underlying underwriting performance that may be obscured by the effects of catastrophe costs and prior years’ reserve development, the amounts of which may be significant and may vary significantly between periods.
|