HORACE MANN EDUCATORS CORP /DE/

Net Premiums and Contract Charges Earned

For the three months ended March 31, 2026, net premiums and contract charges earned increased $14.7 million as the Property & Casualty segment had higher sales* in the Property business lines and the Company sees strong growth in our Supplemental and Group Benefits segment.

Net Investment Income

For the three months ended March 31, 2026, total net investment income decreased $5.2 million. The decrease for the quarter is primarily due to lower returns from our limited partnership funds. The annualized investment yield on the portfolio excluding limited partnership interests* was as follows:

During the three months ended March 31, 2026, we continued to identify and purchase investments with attractive risk-adjusted yields relative to market conditions without venturing into asset classes or individual securities that would be inconsistent with our overall investment guidelines. The Company continues to deploy capital in accordance with its strategic asset allocation framework, with the objective of maintaining diversification while balancing risk and return. Investments are allocated across public and private fixed income strategies, commercial mortgage loan funds, and limited partnership interests based on relative value considerations, portfolio capacity, and income objectives.

Net Investment Gains (Losses)

For the three months ended March 31, 2026, total net investment losses decreased by $1.1 million. The breakdown of net investment gains (losses) by transaction type were as follows:

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

Other Income

For the three months ended March 31, 2026, other income increased $2.3 million.

Benefits, Claims and Settlement Expenses

For the three months ended March 31, 2026, benefits, claims and settlement expenses decreased $6.8 million due to lower catastrophe losses and underlying losses in the Property & Casualty segment as well as lower Life benefits due to favorable mortality compared to prior year.

Interest Credited

For the three months ended March 31, 2026, interest credited increased $1.0 million.

Under the deposit method of accounting, the interest credited on the reinsured annuity block continues to be reported. The average deferred annuity credited rate, excluding the reinsured annuity block, was 3.4% and 3.3% as of March 31, 2026 and March 31, 2025, respectively.

Operating Expenses

For the three months ended March 31, 2026, operating expenses increased $12.7 million, reflecting higher expenses related to our Early Retirement Offering in the Corporate & Other segment.

Deferred Policy Acquisition Costs (DAC) Amortization Expense

For the three months ended March 31, 2026, DAC amortization expense increased $2.7 million, primarily due to premium increases in the Property & Casualty segment driving higher commission and underwriting expenses which increase DAC asset levels.

Intangible Asset Amortization Expense

For the three months ended March 31, 2026, intangible asset amortization expense was flat with prior year.

Interest Expense

For the three months ended March 31, 2026, interest expense increased $0.6 million due to an increase in the level of debt associated with the issuance of the 2025 Senior Notes that were used to repay the 2015 Senior Notes.

Income Tax Expense

The effective income tax rate on our pretax income, including net investment gains (losses), was 17.9% and 19.6% for the three months ended March 31, 2026 and 2025, respectively. Income from investments in tax-advantaged securities reduced the effective income tax rates by 2.1 and 2.3 percentage points for the three months ended March 31, 2026 and 2025, respectively. The effective tax rate was further reduced by 1.7 and 0.2 percentage points for the three months ended March 31, 2026 and 2025, respectively, as a result of purchases of transferable tax credits to be utilized on the federal income tax returns.

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

As of March 31, 2026, our federal income tax returns for years prior to 2022 are no longer subject to examination by the Internal Revenue Service. We do not expect any assessments for tax years that remain subject to examination to have a material effect on our financial position or results of operations.