What Horace Mann Educators (HMN) Said on Its Q3 Earnings Call

Key Points

• Record Q3 performance: Core EPS rose 50% year over year to $2.06, and Horace Mann raised its 2026 core earnings outlook to $5.75–$5.95 per share.
• Results included unusually favorable factors: Lower catastrophe losses, reserve development, and exceptionally strong limited partnership returns boosted earnings. Management offered an illustrative normalized 2026 range of $4.25–$4.45 per share, which it said is not 2027 guidance.
• Growth initiatives are progressing: Horace Mann completed its ESI acquisition, adding nearly 1 million covered lives; once three related transactions close, they are expected to contribute $0.40–$0.50 in annual core EPS.

Horace Mann Educators NYSE: HMN reported its strongest quarterly earnings on record and raised its full-year 2026 outlook, as favorable insurance underwriting and investment results helped drive a 50% increase in third-quarter core earnings per share.

Core earnings per share rose to $2.06 from the prior-year quarter, while trailing 12-month core shareholder return on equity reached 14.2%, President and CEO Marita Zuraitis said on the company’s earnings call. Horace Mann now expects full-year core earnings of $5.75 to $5.95 per share.

Executives cautioned, however, that several factors boosting this year’s results may not recur at the same level. CFO Ryan Greenier said the company’s results benefited from lower-than-average catastrophe losses, favorable prior-year reserve development, unusually strong limited partnership returns and reserve releases following annual actuarial reviews.

To account for those items, the insurer provided an illustrative normalized 2026 core earnings range of $4.25 to $4.45 per share. Greenier said the figure is not 2027 guidance, but a reference point for assessing the company’s underlying earnings capacity.

Property and Casualty Margins Improve

Third-quarter property and casualty core earnings rose 22% year over year to $39 million. The segment’s combined ratio improved nearly four points to 83.6%, helped by underwriting performance and $8 million in favorable prior-year reserve development.

The auto combined ratio improved nearly five points to 90.6%, primarily because of favorable reserve development, Greenier said. The property combined ratio improved nearly two points to 73.5%, with relatively benign weather supporting results. A combined ratio below 100% indicates an underwriting profit.

Catastrophe losses were $14 million pretax in the quarter and remained below the company’s five- and 10-year averages. Horace Mann’s revised outlook assumes approximately $60 million in catastrophe losses for the full year, including an allowance for normal seasonal activity in the fourth quarter.

Responding to an analyst’s question, Zuraitis said both lower catastrophe losses and benign underlying weather helped the homeowners business. Greenier added that prior rate increases, underwriting changes and portfolio optimization efforts were also contributing to performance.

Zuraitis said the company had reached its targeted auto profitability across its markets, although the effects of earlier rate actions on retention and new business take time to work through. She said sales momentum could take longer to regain in states including Texas, Georgia and California.

Benefits Growth and Acquisitions

Individual Supplemental & Group Benefits generated $19 million in third-quarter core earnings, up 10% from a year earlier. Individual supplemental sales increased 5% in the quarter, while group benefits sales rose 67% for the first nine months of the year. Group covered lives increased 7% over the past year.

Both businesses benefited from reserve releases following the annual review of actuarial assumptions, Greenier said. He told analysts that the company’s group business is predominantly public sector and that performance, particularly in long-term disability, was in line with expectations.

Horace Mann completed its acquisition of Employee Services, LLC, or ESI, on October 1. The employee assistance and well-being provider adds nearly 1 million covered lives, more than half of whom are educators and others serving their communities, Zuraitis said.

ESI is the first of three Medical Mutual of Ohio transactions to close; the other two are expected to close in the first quarter of 2027. Once all three are complete, management expects them to contribute approximately $0.40 to $0.50 in annual core earnings per share and add about 100 basis points to core shareholder return on equity.

Greenier said Horace Mann used excess capital to fund the ESI purchase and would evaluate the mix of debt and capital for the approximately $130 million balance associated with the remaining transactions. The company’s debt-to-capital ratio was in the mid-20% range, he said, and management is comfortable operating in the high 20s.

Investment Income Supports Results

Life and retirement core earnings doubled from the prior-year quarter, supported by higher investment income and strong life results, including a reserve release. Life sales rose 3% in the quarter, and retirement assets under administration increased 8% over the past year.

Total net investment income increased 17% to nearly $140 million. Limited partnership income more than doubled, with the portfolio generating an annualized quarterly return above 20%, compared with the company’s long-term expectation of approximately 8.5%.

Greenier said the limited partnership returns are reported on a one-quarter lag and reflected strong valuation marks in several venture capital and private equity funds rather than a specific transaction or initial public offering. Core fixed-income portfolio income increased 7%.

For 2026, Horace Mann expects total net investment income of $485 million to $495 million. The company returned $16 million to shareholders during the third quarter, including $15 million in dividends and $1 million in share repurchases. Greenier said it bought back an additional $1.5 million of shares in October.

Management reiterated its three-year objectives of 10% annual growth in normalized core earnings per share and a sustainable core shareholder return on equity of at least 12% to 13%.

About Horace Mann Educators (NYSE:HMN)

Horace Mann Educators Corporation NYSE: HMN is an insurance and financial services company focused on serving educators and employees of public schools. The company provides products designed to address the personal insurance, life insurance and retirement needs of educators, school administrators and other education professionals.

Its offerings include automobile and homeowners insurance, life insurance, supplemental insurance products and retirement annuities. Horace Mann also provides retirement planning resources and other financial services intended to help educators prepare for retirement and manage their long-term financial needs.

Founded in 1945, the company is headquartered in Springfield, Illinois, and markets its products primarily through a network of agents serving the education community across the United States.

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