Horace Mann Educators NYSE: HMN raised its full-year 2026 core earnings guidance after reporting record second-quarter core earnings of $1.17 per share, up more than 10% from the prior-year period.
The insurer now expects 2026 core earnings of $4.60 to $4.90 per share. President and Chief Executive Officer Marita Zuraitis said the higher outlook reflected strong first-half operating performance and confidence in trends for the rest of the year.
“The strength of our second quarter results reflects disciplined execution across the business,” Zuraitis said, pointing to improved property-and-casualty profitability, growth in life and supplemental-benefits sales, and expanded distribution capabilities.
Property and casualty results improve
Property and casualty core earnings rose 56% year over year to $26 million. The segment’s reported combined ratio improved seven points to 89.6, aided by favorable weather, lower catastrophe losses, favorable prior-year reserve development and underwriting actions taken in recent years.
Favorable prior-year reserve development totaled $7 million, including $5 million in property and $2 million in auto, primarily due to lower-than-expected claims severity, Chief Financial Officer Ryan Greenier said.
Net written premiums in the segment were essentially flat at $212 million. Property premiums increased 6%, driven by higher average premiums and positive sales trends. The company said it remains focused on profitable growth rather than policy volume in auto insurance, targeting markets where it sees attractive long-term returns.
Greenier said auto frequency trends were favorable in the first half, with low-single-digit frequency trends supported by weather and other factors. Physical-damage severity was also favorable, while liability loss trends were in the mid-single digits. Horace Mann’s mid-single-digit 2026 auto rate plan remains on track to support profitability, he said.
The company lowered its full-year catastrophe-loss assumption to approximately $75 million from approximately $90 million, based on first-half experience. However, management said it expects catastrophe losses to normalize in the second half and did not plan for first-half weather conditions to persist.
Auto household retention was near 84% during the quarter, while customer retention in the company’s other businesses remained near or above 90%, according to Zuraitis.
Benefits and life sales gain momentum
Total revenue increased 8% from the prior-year quarter. Sales in individual supplemental and group benefits increased 44%, while life sales rose 20%.
Individual supplemental sales increased 5%, supported by demand for the company’s enhanced cancer product, while persistency was approximately 89%. Group-benefits sales were driven by demand for the paid family and medical leave enhancement introduced earlier this year alongside the company’s short-term disability offering.
Horace Mann increased its full-year individual supplemental and group benefits blended benefit-ratio assumption to approximately 42%. Greenier said the revision reflects strong segment growth and a greater contribution from paid family and medical leave products.
The company expects newer paid family and medical leave policies to experience initially elevated utilization as covered employees begin using benefits. Management said that pattern had been contemplated in pricing and underwriting assumptions. The product can be repriced annually, Greenier said, and is sold as part of the company’s short-term disability offering rather than as standalone coverage.
Life and retirement core earnings were $17 million. Life sales increased 20%, which management attributed to investments in agent recruiting, training and productivity. Life persistency was approximately 96%.
Retirement contract deposits were modestly lower from a year earlier because of product mix and market conditions, though fee income and persistency supported stable earnings, the company said.
Investment outlook revised lower
Horace Mann lowered its full-year total net investment income outlook to $465 million to $475 million, including managed portfolio income of $365 million to $375 million.
Management said higher interest rates continue to support reinvestment yields in core fixed income, but they are pressuring returns from certain alternative investment strategies. Greenier cited private equity, infrastructure debt and real-estate-related strategies as areas where the company incorporated lower, but still positive, expected returns for the remainder of the year.
New-money yields in the company’s core fixed-income portfolio were 5.85% in the second quarter, more than 100 basis points above the portfolio yield for that portion of assets. Greenier said this marked the 18th consecutive quarter in which new-money yields exceeded yields in the existing portfolio.
Acquisitions expected to add to 2027 earnings
The company said acquisitions announced in July are progressing as planned but are not included in updated 2026 guidance because their anticipated closing dates are not expected to have a meaningful impact on this year’s earnings.
Beginning in 2027, Horace Mann expects the transactions to be immediately accretive to earnings per share and to add about 100 basis points to return on equity. Greenier said the acquisitions could contribute roughly $0.40 to $0.50 in annual run-rate earnings beginning in 2027.
Management reiterated that the transactions carry an estimated tangible-book-value payback period of six to seven years under standard dilution methodology, while the combined company’s ongoing earnings are expected to replenish the associated book-value reduction within about a year after closing.
During the quarter, Horace Mann returned $15 million to shareholders through dividends and had approximately $37 million remaining under its share-repurchase authorization. Tangible book value per share increased 10% year over year.
The company reaffirmed its longer-term objectives of 10% compound annual growth in core earnings per share and sustainable shareholder return on equity of 12% to 13%.
About Horace Mann Educators (NYSE:HMN)
Horace Mann Educators Corporation, based in Springfield, Illinois, specializes in insurance and retirement solutions tailored to educators and school employees across the United States. Founded in 1945, the company partners with public school districts to deliver property and casualty insurance products—including auto, home and liability coverage—through a network of dedicated local agents. Its targeted approach focuses on understanding the unique needs and schedules of teachers, administrators and other school staff, distinguishing its services within the broader insurance market.
In addition to property and casualty offerings, Horace Mann provides life and disability insurance, annuities and retirement plan products designed to help educators plan for financial security beyond their teaching careers.
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