HORACE MANN EDUCATORS CORP /DE/

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

(1) In the second quarter of 2025, the Company recorded a reduction in net investment income due to an immaterial out-of-period correction of an error. See additional disclosure contained in Note 1 of the September 30, 2025 Form 10-Q.

For the three and nine months ended September 30, 2025, net investment income from our managed investment portfolio increased $9.2 million and $23.8 million. The increase was primarily driven by higher returns in limited partnerships and core fixed performance. The investment yield on the portfolio excluding limited partnership interests was 4.6%, with new money yields continuing to exceed portfolio yields in the core fixed maturity securities portfolio.

For the three and nine months ended September 30, 2025, pretax net investment losses increased $0.5 million and $6.0 million. The increase was due to realized losses on equity securities.

Pretax net unrealized investment losses on fixed maturity securities as of September 30, 2025 were down $135.5 million, or 29.8%, compared to December 31, 2024, primarily due to a decrease of 42 basis points in US Treasury rates and investment-grade credit spreads that were tighter by 6 basis points.

Fixed Maturity and Equity Securities Portfolios

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

(1)The All other corporates category contains 21 additional industry sectors. Retail, Food & Beverage, Industry- Manufacturing, Telecommunications, Leisure-Entertainment represented $191.9 million of fair value at September 30, 2025, with the remaining 16 sectors each representing less than $32.0 million.

(2)At September 30, 2025, 100% were investment grade, with an overall credit rating of AA, and the positions were well diversified by property type, geography and sponsor.

(3)Holdings are geographically diversified, 41.4% are tax-exempt and 77.3% are revenue bonds tied to essential services, such as mass transit, water and sewer. The overall credit quality of the municipal bond portfolio was AA- at September 30, 2025.

(4) Based on fair value, 99.9% of the collateralized loan obligation securities were rated investment grade based on ratings assigned by a nationally recognized statistical ratings organization (NRSRO- S&P, Moody's, Fitch, Dominion, A.M. Best, Morningstar, Egan Jones).

As of September 30, 2025, our diversified fixed maturity securities portfolio consisted of 4,018 investment positions, issued by 2,656 entities, and totaled approximately $5.7 billion in fair value. This portfolio was 97.4% investment grade, based on fair value, with an average quality rating of A+. Our investment guidelines target

single corporate issuer concentrations to 0.5% of invested assets for AAA or AA rated securities, 0.35% of invested assets for A or BBB rated securities, and $5.0 million for non-investment grade securities.

Rating of Fixed Maturity Securities and Equity Securities(1)

The following table presents the composition and fair value of our fixed maturity and equity securities portfolios by rating category. As of September 30, 2025, 95.1% of these combined portfolios were investment grade, based on fair value, with an overall average quality rating of A+. We have classified the entire fixed maturity securities portfolio as available for sale, which is carried at fair value.

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

(2)At September 30, 2025, the AA rated fair value amount included $359.6 million of U.S. Government and federally sponsored agency securities and $631.4 million of mortgage-backed and other asset-backed securities issued by U.S. Government and federally sponsored agencies.

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

As of September 30, 2025, the fixed maturity securities portfolio had $395.2 million of pretax gross unrealized investment losses on $3,095.0 million of fair value related to 2,135 positions. Of the investment positions with gross unrealized losses, there were 363 trading below 80.0% of the carrying value as of September 30, 2025. The Company views the decrease in fair value of all of the fixed maturity securities with unrealized losses as of September 30, 2025 as due to factors other than a credit loss. Future changes in circumstances related to these and other securities could require subsequent recognition of impairment. See Part II - Item 8, Note 2 of the Consolidated Financial Statements in this Quarterly Report on Form 10-Q for more information.

Unrealized investment losses declined primarily due to a decrease in US Treasury rates. As of September 30, 2025, the 10-year U.S. Treasury yield decreased 42 basis points since December 31, 2024, declining from 4.57% as of December 31, 2024 to 4.15% as of September 30, 2025. Credit spreads were only slightly tighter during the same time period for investment grade by 6 basis points, while high yield was wider by 6 bps. As of September 30, 2025, investment grade and high yield total returns were up 6.88% and 7.22%, respectively, since December 31, 2024.