HORACE MANN EDUCATORS CORP DE

The Life & Retirement segment markets 403(b) tax-qualified fixed, fixed indexed and variable annuities; the Horace Mann Retirement Advantage® open architecture platform for 403(b)(7) and other defined contribution plans; and other retirement products to educators as well as traditional term and whole life insurance products. Horace Mann is one of the largest participants in the K-12 educator portion of the 403(b) tax-qualified annuity market, measured by 403(b) net premiums written on a statutory accounting basis. The Life & Retirement segment represented 36% of total revenues in 2023.

•Annualized quarterly net interest spread on fixed annuities down 83 basis points

•Life mortality costs consistent with prior year and a favorable market risk benefit adjustment in Retirement

•Net contribution from FHLB funding agreements remained stable year over year as net investment income reflected higher earnings from the floating rate investments backing the program and interest credited similarly reflected offsetting higher interest expense

The following table provides certain information for Life & Retirement for the periods indicated.

Life & Retirement segment net income for the quarter of $11.7 million was down 16.4%, primarily due to a lower net interest spread. The spread was affected by lower returns related to valuation adjustments in two real estate-related limited partnership funds and one commercial mortgage loan fund. Benefits and change in reserves benefited from a favorable market risk benefit adjustment. While the net contribution from our FHLB funding agreements remained stable compared with 2023, higher FHLB borrowing costs drove the higher interest credited expense.

For the Retirement business, net annuity contract deposits were down 4.3% for the quarter at $104.5 million. Educators continue to begin their relationship with Horace Mann through 403(b) retirement savings products, which provide encouraging cross-sell opportunities. Average persistency has declined slightly from the prior year, with the decline in the persistency of non-qualified business more significant than the declines in the qualified business.

Horace Mann currently has $5.3 billion in annuity assets under management, including $2.1 billion of fixed annuities, $2.8 billion of variable annuities and $0.4 billion of fixed indexed annuities. Assets under administration, which includes Horace Mann Retirement Advantage® and other advisory and recordkeeping assets, continue to benefit from the strong equity markets.

Life annualized sales were $2.3 million for the quarter and persistency remains strong. Life insurance in force rose to $20.6 billion at quarter-end.

We actively manage our interest rate risk exposure, considering a variety of factors, including earned interest rates, credited interest rates and the relationship between the expected durations of assets and liabilities. We

estimate that over the next 12 months approximately $496.1 million of the Life & Retirement investment portfolio and related investable cash flows will be reinvested at current market rates.

As a general guideline, based on our existing policies and investment portfolio, the impact from a 100 basis point decline in the average reinvestment rate would reduce Life & Retirement net investment income by approximately $1.9 million in year one and $5.8 million in year two, reducing the annualized net interest spread on fixed annuities by approximately 6 basis points and 20 basis points in the respective periods, compared to the current period annualized net interest spread on fixed annuities. We could also consider potential changes in rates credited to policyholders, tempered by any restrictions on the ability to adjust policyholder rates due to guaranteed minimum crediting rates.